The election of Joe Biden as the 46th President of the US has unleashed bull spirits in the global stock markets as investors around the world expect the country’s trade war with China to slow down in the near future. The global stock rally also propelled India’s Sensex and Nifty to a new lifetime high and the expectations are that the rise will continue in the coming weeks as global geopolitical uncertainty tapers, experts said.
On Monday, the Sensex closed with gains of 704 points, or 1.68 per cent, at 42,597. The wider index Nifty rose 197 points, or 1.61 per cent, to close at 12,461. It took less than eight months for the Sensex and Nifty to recoup from a historical loss suffered since the market crash in March.
“Possibly the US-China trade tensions will cool down. Unlike Donald Trump, Biden does not seem a radical actor. Markets believe that the Fed will continue with stimulus packages in the US. Also, Pfizer’s announcement of a Covid vaccine is a major boost,” said Kishor Ostwal, MD, CNI Global Research.
The Dow Jones Futures index was trading nearly 1,700 points, or 6 per cent, higher on Monday as Pfizer said its vaccine was 90 per cent effective in preventing Covid.
There is also a counter view to the current cheer brought on by the stock rally. “Like the markets bottomed out in the middle of the deadliest pandemic in March, everything now clearly seems euphoric,” said Sushil Kedia, founder, Kedianomics, an independent market analysis company.
In November so far, foreign portfolio investors (FPIs) have purchased stocks worth nearly ₹18,000 crore in the cash segment. In the index futures segment, they were net purchasers of stocks of ₹5,379 crore and stock futures of ₹2,808 crore.
“There is positive movement in IT stocks on the back of expectations of fewer curbs on outsourcing by the new regime in the US. There is an expectation of more flows into emerging markets due to a weak dollar and that is reflecting in the performance across emerging markets,” said Hemang Jani, Head, Equity Strategist, Motilal Oswal Financial.