Stock market buoyed by US election results; Sensex, Nifty soar

Indian equity markets turned positive on Tuesday, recovering from earlier losses, as investors flocked to large financial stocks, seen as having strong valuations. The market sentiment was cautious, with the upcoming U.S. presidential election adding an element of uncertainty.

In a statement that did not address the outcome of the U.S. election directly, Reserve Bank of India (RBI) Governor Shaktikanta Das highlighted the strengthening ties between India and the U.S. He assured that these relations would continue to thrive, regardless of the election result. "US elections can go either way till the end. Two things are very clear. Overall India US relations have become much stronger and that will continue irrespective of who wins," he said.

Ajay Bagga, Banking and Market Expert told ANI "US Election vote counting has started. Markets are reacting to every news flow, as they are primed to do. Election Day will turn into Election Night. The risk is, it could become Election Week or Weeks. With elevated volatility, markets will lurch from Trump Trades to Harris Trades, bursting through stop losses on both sides. Best to wait this out, at least for today".

He further added "The 7 Swing States are staying too close to call. Voting in some states will continue till 12 midnight ET US time. We are getting calls on winners in East Coast states already. Patience is the biggest virtue for investors today. Let a winner emerge, we will be back with analysis on what will work for India and what will not. For now, -wait" .

On the National Stock Exchange (NSE), most sectoral indices saw gains, except for the Nifty Consumer Durables sector. The Nifty IT sector led the pack, rising 0.86 percent, followed by Nifty Bank, which gained 0.45 percent, and Nifty Auto, which advanced by 0.51 percent.

The dollar index, which measures the greenback’s performance against a basket of six major currencies, was up 1.64 percent at 105.11. "The dollar index rose after Trump went up in the US elections initial results and was also leading in the Senate and House," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Meanwhile, Brent crude oil prices fell 0.98 percent, trading at USD 74.79 per barrel in futures markets. "All will depend on RBI as to where it will allow the rupee to open and how it will move depending on intra-day election results. Wide range for rupee would be 84.00 to 84.35," Bhansali said.

Sensex and Nifty post gains

On the domestic front, the Sensex gained 390.93 points, or 0.49 percent, closing at 79,867.56 points. The Nifty also saw a rise of 135.60 points, or 0.56 percent, ending the day at 24,348.90 points.

Foreign Institutional Investors (FIIs) were net sellers on Tuesday, offloading shares worth Rs 2,569.41 crore. In contrast, Domestic Institutional Investors (DIIs) were net buyers, purchasing shares worth Rs 3,030.96 crore, according to data from the exchanges.

"The sharp rebound in the market yesterday indicates a halt to the downward trend witnessed during the last many days. The fact that the rebound is being led by fairly valued and fundamentally strong large banking stocks is important and points to the possibility of the continuation of the trend.

"However, the poor earnings growth in Q2 and earnings downgrades for FY25 are headwinds that will constrain a sustained rally," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Despite the noise surrounding the U.S. elections, market experts suggest that the focus will shift back to economic fundamentals in the coming days, which will ultimately determine the market's direction.