India : Sensex recovers amid Trump win black money curb, down 339 pts

Equity benchmarks recovered sharply from day’s lows on Wednesday amid the victory of Donald Trump in US presidential elections and the government’s move to curb the black money. Recovery in global peers, short covering in healthcare & select banks and rupee appreciation helped the market cut losses.The 30-share BSE BSE Sensex lost nearly 1700 points intraday, before closing down 338.61 points or 1.23 percent at 27252.53.

The 50-share NSE Nifty went closer to 8000 level but short covering drove it above 8400. The index settled the trade at 8432, down 111.55 points or 1.31 percent from the previous close.

Analysts say they expect the market to be rangebound in near term and the range can be 8400-8800 as new US president’s move will be closely watched while the move to curb the black money may help the RBI ease monetary policy going ahead.

“Donald Trump winning the US Presidential elections could be a mixed bag for India. On the one hand, India could get impacted by the ripples caused by the (much feared) policies sought to be implemented by Trump. On the other hand, India could grow as an important ally for US going by his views on China and Middle East,” Dhiraj Relli of HDFC Securities says.

Kalmesh Rao of Kotak Securities says trading volumes in market may see a dip in the near future especially from the retail investors. However, the HNI and institutional volumes may not be impacted significantly. The volumes will pick up over medium term to long term, he feels.

Better control over liquidity, inflation, fiscal deficit that the government’s black money measure could provide, has stoked expectation of RBI easing rates this fiscal, Anand James of Geojit BNP Paribas Financial Services says.

The broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices falling 1.85 percent and 2.66 percent, respectively. More than 3 shares declined for every share rising on the exchange.

European markets were off day’s low after Donald Trump defeated Hillary Clinton in the US presidential elections. France’s CAC and Germany’s DAX fell over a percent at the time of writing this copy. Dow Jones and S&P 500 futures saw knee-jerk reaction before polls results but rebounded on elections outcome.

Meanwhile, the rupee also appreciated, rising 19 paise to 66.43 against the US dollar from the previous close.

Pharma stocks bucked the trend as Nifty Pharma gained 2 percent on the assumption that the new regime in US may be less disruptive. Sun Pharma and Dr Reddy’s Labs gained 4-5 percent.

Lupin ended off day’s high, trimming gains from 3.6 percent to 1.3 percent after its second quarter earnings missed analysts’ expectations. Even the sequential performance was subdued due to weak operational performance.

Nifty Bank also turned positive in late trade, especially lead by PSU banks after analysts say growth should be strong after government’s demonetisation move. State Bank of India gained nearly 3 percent followed by Bank of Baroda, Canara Bank and PNB with 1-2 percent upside.

The Prime Minister Narendra Modi on Tuesday evening banned the legal tender of Rs 500 and Rs 1,000 notes.

Reliance Industries (up 0.27 percent) and HDFC Bank (up 0.19 percent) also aided the recovery.

However, technology stocks hit hardest as analysts say there could be push for immigration reforms after Trump’s victory. Nifty IT index lost 3.25 percent as TCS tumbled 5 percent and Infosys was down 2.7 percent.

Among others, HDFC, ITC, Maruti Suzuki, M&M, Hero Motocorp, Adani Ports and Bajaj Auto were down 3-5 percent.