Mumbai (Maharashtra) [India], November 7 : Indian indices declined by over a per cent each on Thursday, as investors await US Federal Reserve Chair Jerome Powell's remarks on the future direction of the rate trajectory.
BSE Sensex declined 1.06 per cent or 850 points to 79,528, while NSE Nifty declined by 1.16 per cent or 285 points to 24,199.
Investors remained on the sidelines awaiting the Fed's decision on the rate cut. A 25 basis point rate cut is expected by the US Fed by most experts.
Investors remained on the sidelines awaiting the Fed's decision on the rate cut. A 25 basis point rate cut is expected by US Fed by most experts. Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that Trump's pro-business intiatives of Amerca First will influence his decisions.
"His pro-business initiative of 'America First' can strengthen the American economy. But if he walks his talk and imposes a 60% tariff on Chinese imports and a 10 to 20% tariff on imports from other countries, that would trigger inflation and jeopardise the Fed's policy of containing inflation, necessitating a rethink of the Fed's present policy of rate cuts. This has the potential to negatively impact global stock markets," he added.
Relentless FII outflow has further dented investors' sentiments. FIIs have offloaded equities worth Rs 4445.59 crore on Wednesday after a record Rs 94,000 crore in the month of October.
Market breadth was negative during the trading hours, with 46 out of 50 Nifty stocks in the red, led by Hindalco, Trent, Grasim, Shriram Finance, and Adani Enterprises, which saw losses of up to 8.42 percent.
Only four Nifty stocks--Apollo Hospitals, HDFC Life, State Bank of India, and Tata Consultancy Services--managed to close in the green.
The market at NSE saw all of its sectoral indices ending in red territory, with auto, metal, power, telecom, pharma, and realty down 1-2 percent.
As per the experts, the market looks sceptical ahead of the US Federal Reserve's monetary policy announcement.
"The Trump victory is turning out to be more potentially transformative than thought earlier. With the Congress and the Senate coming under Republican control and President Trump exercising power without bothering about another term in office, hugely transformational decisions are possible in the months following Trump's assumption of office. These decisions may turn out to be both good and bad." said V K Vijayakumar
He added that the 'Trump trade,' which has sharply lifted the US markets, is unlikely to have a similar positive impact in India since Indian market valuations are high and there are headwinds of an earnings slowdown.
"It will be premature to comment with certainty how the interrelation between global politics, economics and financial market performance will evolve; however, the market will preempt the impact based on available information on his policies and public comments," said Jitendra Gohil, Chief Investment Strategist, Kotak Alternate Managers.
According to Gohil, the market has already factored in a stronger dollar and higher US yields as Trump's policies seem to be inflationary. Hence, in the near term, the rupee may depreciate, and Indian yields may see some spike.
In global markets, US Treasury yields surged, driving the US dollar to its biggest one-day gain in over two years, pressuring commodity prices and contributing to a drop in gold. This strengthening dollar is likely to attract more investments into US equities, potentially leading to further outflows from emerging markets.