Donald Trump’s victory in the US presidential election provided a booster shot to domestic equities as investors rejoiced in anticipation that India could be a key beneficiary of the China Plus One policy.
Shares of information technology companies were the top gainers as potential cuts in corporate tax rates in the US are likely to aid the growth for these companies. HCL Tech, Tech Mahindra, Infosys and Tata Consultancy Services jumped 3.5-4.5%, contributing to 51% of the gains on the Sensex.
Pharma stocks also did well, with Dr Reddy’s and Sun Pharma rising 2.2% and 1.43%, respectively. Christy Tan, investment strategist at Franklin Templeton Institute, said, “Fears of caps on prescription drug prices will recede, boosting the fortune of the pharma sector.”
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Overall, the Sensex and Nifty rose 1.1% each to close at 80,378.13 points and 24,484.05 points, respectively. India outperformed most global peers as the MSCI EM index was down nearly 1% and Euro Stoxx 50 was up 0.6%.
The broader markets outperformed as the BSE Smallcap index rose 2% and the BSE Midcap index jumped 2.3%. The market capitalisation of BSE-listed companies rose by Rs 7.7 lakh crore.
“Our outlook for Indian markets under a potential Trump administration remains optimistic. While global trade volatility may rise, India stands to benefit as a relative beneficiary among emerging markets as US companies pursue a ‘China Plus One’ strategy, likely boosting sectors like EMS, chemicals and pharmaceuticals,” said Trideep Bhattacharya, president and CIO – equities at Edelweiss MF.
However, some experts are not so much optimistic. Andrew Holland, CEO of Avendus Capital Alternate Strategy, said the concerns of a strong dollar under the Trump regime may propel global investors to choose developed markets over emerging markets.
Foreign portfolio investors (FPIs) sold shares worth Rs 4,446 crore on Wednesday as per provisional data while domestic institutional investors (DIIs) bought shares worth Rs 4,889 crore.
While the election results are a positive for the US markets, Holland said he is not sure how much positive they will be for India. “I know the narrative will say that India will be a beneficiary because China will get more tariffs.
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