Markets: Amid US poll, Fed uncertainties, Sensex, Nifty fall
Virendra Pandit
New Delhi: Indian equities saw their worst session in over a month on Monday, driven by heightened uncertainty around the US presidential election and a spike in volatility, which reached a three-month high.
The NSE Nifty 50 dropped 1.27 percent to 23,995.35, while the BSE Sensex declined 1.18 percent to 78,782.24, both indices posting their steepest single-day losses since October 3, the media reported.
The market downturn came after a challenging October, where benchmarks shed about 6 percent because of record foreign outflows and lackluster earnings. This decline followed a 15 percent rally over the previous four months, leaving markets overvalued by historical standards, according to some analysts.
The outcome of the ongoing US presidential elections loomed large on Indian equity markets as Democratic Party nominee and Vice President Kamala Harris and Republican candidate and former President Donald Trump ran neck-and-neck in various opinion polls, with no clear winner expected immediately.
Also, markets anticipate a 25-basis-point US Federal Reserve rate cut on November 7, potentially boosting foreign inflows into emerging markets.
Meanwhile, India VIX, or the India Volatility Index, a metric that measures the expected volatility of the Nifty 50, spiked nearly 9 percent intraday before settling 5 percent higher.
With the US voting to elect its next president on Tuesday, markets around the world are feeling the effects of a close race between Trump and Harris.
According to fresh reports, Harris surpassed Trump in a new poll in Iowa. “Kamala Harris’ win is not good news for India,” market analyst Ambareesh Baliga, remarked.
Recently, Phillip Capital said Harris’ win would be neutral/mean continuity for the economy, equities, and other asset classes. Trump would, however, have a reasonable impact on emerging markets (EMs), equities, and currency due to de-globalization.
The Sensex and the Nifty historically gained 82.3 percent and 73.6 percent respectively under Trump 1.0 as compared to 59 percent and 64.5 percent under the Biden administration, data shows.
The US Federal Reserve’s policy meeting scheduled from November 6 to November 7 is also adding to the worries after US job growth almost stalled in October. Nonfarm payrolls increased by 12,000 jobs in October, the smallest gain since December 2020. The economy added 112,000 fewer jobs in August and September than previously reported, the media said.
