Indian Stock Markets Experience Volatility Ahead of Trump's Inauguration
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Synopsis
As Indian investors remain cautious before Donald Trump’s inauguration, the domestic stock market displays mixed results. Large-cap sectors struggle, while public sector banks perform better. The upcoming Q3 earnings season is pivotal for market stability, amidst investor concerns regarding US economic policies.
Key Takeaways
- Investors are cautious due to Trump's inauguration.
- Large-cap IT and banking stocks underperform.
- Public sector banks show resilience.
- Q3 earnings will be crucial for market confidence.
- Market volatility may increase with FII outflows.
Mumbai, Jan 18 (NationPress) Indian investors are taking a cautious stance as they anticipate the inauguration of Donald Trump as the 47th US President, particularly regarding his comments on tariffs. This week resulted in a mixed performance for the domestic benchmark indices.
After experiencing three days of gains, the domestic market concluded the week on a low note on Friday. Large-cap IT and banking stocks faced significant underperformance, attributed to a cautious outlook on discretionary spending for the former and subdued growth in deposits and credit, compounded by tighter liquidity conditions for the latter.
On a positive note, public sector banks (PSUs) showed strong performance throughout the week.
The Sensex wrapped up the week at 76,619.33, while the Nifty settled at 23,203.2, continuing to face bearish pressure.
The Nifty Bank closed at 49,540.6, down by 738.10 points or 1.50 percent. Meanwhile, the Nifty Midcap 100 index finished at 54,607.65, recording an increase of 123.85 points, or 0.23 percent, and the Nifty Smallcap 100 index closed at 17,672.05, up by 28.75 points, or 0.16 percent.
Since reaching a peak in September 2024, the Nifty 50 has declined by 11.5 percent, with the Midcap index down by 12 percent and the Smallcap index decreasing by 11 percent.
The upcoming Q3 earnings season is crucial for restoring investor confidence and market stability.
Market analysts indicate that a risk-averse attitude among investors is growing due to the strengthening of the dollar. Additionally, rising uncertainty regarding potential economic policies from the new US administration has influenced overall market sentiments.
In the short term, the market is likely to remain cautious due to moderate expectations for Q3 earnings, with persistent foreign institutional investor (FII) outflows potentially increasing volatility.
Looking ahead, the policies and statements from the incoming US President will be closely monitored, particularly regarding tariffs. Experts suggest that higher inflation in Japan or stricter policies from the BoJ could negatively impact market sentiments.
Now is the time to act with clarity, not panic. The market correction presents an opportunity to differentiate between strong and weak stocks, emphasizing resilience and growth potential, according to Krishna Appala from Capitalmind Research.
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