Diwali celebrations arrived early on Dalal Street as a sudden deep crevice in crude oil prices and a powerful overnight rally on Wall Street sent domestic equities soaring on November 5. The Sensex and Nifty extended their winning streak to six consecutive sessions, as hopes of an early resolution to the West Asia conflict, following the Democrats' sweeping victory in the US midterm elections, triggered a sharp correction in crude oil prices and added to the festive cheer on Dalal Street.
The Sensex opened at 78,910.94, with a gap-up of 1,609.54 points, climbing to a 10-week high. Likewise, the Nifty 50 started the session at 24,378.05, up 417.45 points, or 1.74 per cent.
The combined market value of BSE-listed companies swelled by nearly Rs 7 lakh crore to reclaim the Rs 500 lakh crore mark.
The festive cheer spilled over into the broader market, with midcap, smallcap, and microcap stocks joining the frontline rally. The Nifty Midcap 100, which tracks 100 tradable mid-sized companies, and the Nifty Smallcap 100, comprising 100 listed small-cap companies, advanced over 1 per cent each. The rally was even stronger among smaller companies, with the Nifty 500, covering 500 large, mid and small-cap stocks, and the Nifty Microcap 250, tracking 250 companies beyond the Nifty 500 universe, surging between 1.50 per cent and 2.50 per cent.
Buying by foreign portfolio investors (FPIs) provided further support to domestic equities. FPIs bought shares worth Rs 7,052.74 crore through primary market and stock exchange transactions in the previous session, marking their third consecutive session of net purchases. Their cumulative buying over the three sessions stood at Rs 14,863 crore.
The rally in Indian markets came amid a sharp correction in international crude oil prices. Brent crude traded at $93.78 per barrel, while US West Texas Intermediate (WTI) stood at $86.92 per barrel, following a nearly 10 per cent decline in oil prices.
Asian Stocks Split On Election Fallout
Asian equities traded mixed in morning deals, with technology-heavy indices bearing the brunt of investor concerns over tighter US regulatory oversight, while markets with greater exposure to traditional sectors found support from falling crude oil prices.
South Korea's technology-heavy Kospi plunged over 5 per cent, with semiconductor heavyweights Samsung Electronics and SK Hynix leading the selloff. Investors worried that greater Democratic control of the US Congress could bring tighter regulatory scrutiny of artificial intelligence and semiconductor companies.
The weakness extended to other technology-heavy markets, with Japan's Nikkei 225 declining nearly 1 per cent and Taiwan's Taiex falling 2.70 per cent. The Hang Seng, however, bucked the regional trend, surging over 3 per cent, while Australia's S&P/ASX 200 advanced 2.40 per cent. Lower crude oil prices and strength in traditional sectors helped these markets outperform their regional peers.
Wall Street Cheers Democrats' Win
Wall Street witnessed a strong overnight rally as US equities surged after Democrats secured control of both the House of Representatives and the Senate in the closely watched midterm elections. The election outcome brought greater political clarity and prompted investors to reassess the implications for US trade policy, corporate regulation and global geopolitical tensions.
The Dow Jones Industrial Average led the rally, zooming 3.03 per cent. The S&P 500 climbed 1.58 per cent, while the technology-heavy Nasdaq Composite advanced 1.44 per cent.
The election results marked a setback for President Donald Trump, with Democrats making gains in traditionally Republican strongholds. Investors weighed the possibility of tighter regulatory oversight of technology companies and the potential impact of the changed congressional balance on Trump's trade and tariff agenda.
Expectations that the political outcome could constrain aggressive trade measures also helped ease concerns over global trade uncertainty. At the same time, hopes of an early resolution to the West Asia conflict and the resulting decline in crude oil prices added to the improvement in global risk appetite.
US Midterm Elections: What It Means For Indian Stock Market
The change in congressional control in the US could have implications for global trade flows and investor sentiment towards emerging markets, including India. A possible moderation in President Donald Trump's aggressive trade and tariff policies could ease uncertainty around global trade and improve foreign investor appetite for Indian equities.
Ravi Singh, chief research officer at Master Capital Services, said the impact of the election outcome on Indian markets would largely depend on how US trade policies evolve.
"A shift in congressional control may limit President Donald Trump’s ability to implement aggressive trade and tariff policies, potentially easing global trade uncertainty. This could improve investor sentiment towards emerging markets and support foreign institutional inflows into Indian equities," Singh said.
However, Singh cautioned against expecting an immediate impact on domestic equities, pointing out that several domestic and global factors would continue to influence market direction.
"Domestic corporate earnings, crude oil prices, currency movements and global geopolitical developments will remain the key drivers of Indian markets," he said.
