Donald Trump, President of the US, promised that he will step away peacefully on January 20 clearing an air of uncertainty in US politics. This also cleared the path for huge likely spending in the next four years of Democrat rule.
“Formal certification of Biden presidency and Trump promising smooth transition of power have further pushed US markets higher. Even though this might embolden our bulls too, there are some areas of concern. FII inflows are steadily declining and low- grade stocks are touching record highs. Irrational retail investor enthusiasm for ‘cats & dogs’ is an indication for caution,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“This is not the time for exuberance. Investors can use the present excessive optimism to sell poor quality stocks in the portfolio.”
Factors driving markets
- GDP to shrink less than expected: The central government projects the country’s economy to contract by 7.7 per cent in the current fiscal year 2020-21, as per the first advance estimates of gross domestic product released by the National Statistical Office.
- Wall Street at a high: Wall Street hit record highs on Thursday while bond prices fell as markets bet a new Democratic-controlled government would lead to heavy spending and borrowing to support the US economic recovery.
- Trump concedes: President Donald Trump conceded on Thursday that Biden will be the next US president, a day after his supporters stormed the US Capitol as Congress was certifying Biden’s victory in a stunning assault on American democracy.
How are bluechips doing
After opening in the green, benchmark indices maintained their lead. At 9.40 am, BSE flagship Sensex was up 366.45 points or 0.76 per cent to 48,460. NSE benchmark Nifty followed and added 112 points or 0.79 per cent to 14,250.
In the 50-share pack Nifty, UPL was the biggest gainer, up 3.98 per cent. BPCL, Eicher Motors, Sun Pharma, Infosys, Tech Mahindra, Power Grid, L&T, SBI Life Insurance and TCS were among other gainers.
Hindalco was the top loser in the pack, down 1.85 per cent. Titan, HDFC, Tata Steel, JSW Steel, Kotak Mahindra Bank and Bajaj Finserv were other losers in the pack.
Broader markets
Broader market indices traded with gains in-line with their headline peers in morning trade. Nifty Smallcap added 0.84 per cent while Nifty Midcap advanced 0.66 per cent. Broadest index on NSE, Nifty 500 was up 0.74 per cent.
Century Ply, Sobha, Radico Khaitan, Torrent Power, Indiabulls Housing Finance and Nalco were among major gainers from the space while Mphasis, IDFC First Bank, M&M Financial Services, Strides Pharma, Trident and IB Real Estate were under selling pressure.
Global markets
The buoyant mood lifted MSCI’s broadest index of Asia-Pacific shares outside Japan up 1 per cent, touching a record high. Seoul’s Kospi led the way, charging 2.8 per cent higher, also to a record high. In Tokyo, the Nikkei added 1.73 per cent, hitting its highest level since August 1990.
Hong Kong’s Hang Seng rose 1.2 per cent despite reports the Trump administration was considering banning U.S. entities from investing in an expanded list of Chinese companies. Chinese blue-chip shares were flat after recent gains and Australia’s S&P/ASX 200 rose only 0.48 per cent after the state of Queensland enforced a three-day lockdown
What to expect:
- Q3 earnings: TCS will come out with its result later in the day, starting the Q3 earnings season.
- Forex Reserves: In the evening, RBI will release forex reserves as of week ending January 1, outlining how much dollar it has been buying.
