Tale of the Tape 

Hey guys. Markets got smoked today. 

Nifty and Sensex slipped over a percent each. Consistent FII selling, lackluster earnings and muted global cues continued to dent sentiment. Midcaps (-1.3%) and Smallcaps (-2%) were also not spared. The market breadth was extremely weak with over 4 stocks falling for every gainer. 

Except for IT which closed flat, every other sector ended in the red. Real Estate (-2.9%) and Energy (-2.6%) stocks got beaten up the most.

The Indian Rupee hit a new all-time low of Rs 84.12 against the US Dollar. 

The US votes tomorrow in a big election with major consequences for Indian markets. Read our top story to find out what to expect from a Trump or Kamala victory.

Will November bring cheer to Indian markets? More details below on how markets have performed historically and the volatile triggers that are at play.

PVR Inox, Mahindra & Mahindra and Sun Pharma saw big moves today. Check out their charts below to find out why.

Auto stocks got thrashed on muted October sales. Hero MotoCorp (-4.5%) was the top loser on Nifty. Bajaj Auto and TVS Motor also cracked -4% each. M&M bucked the weakness in the auto sector after announcing the launch of 2 new electric cars. 

Afcons Infrastructure recovered sharply from its intraday low to close at Rs 474 p/sh; +2% from its IPO price. Separately, they won a Rs 1,007 cr order from Madhya Pradesh Metro Rail Corp. 

Tata Power (-4%) was under pressure. Global brokerage firm CLSA sees a further 30% downside from current levels. 

Results reaction. Hatsun Agro’s (-4%) Q2 PAT fell 17% YoY. Exide Industries (-3%) margins were down. 

Azad Engineering (+7%) won a Rs 700 cr order from Mitsubishi Heavy.

Here are the closing prints:

US Elections
Trump Trade!

America’s election kicks off tomorrow! Whatever happens in the land of the free affects Indian markets too especially since this will be an EXTREMELY close race.

Let’s get into the big picture stuff first. On many positions, the Democrats and Republicans don’t differ a lot. Both will signal continuity and want a strong relationship with India, which is important. 

That said, there’s some major issues that will affect Indian companies. The first is corporate taxation (Trump will lower rates, Kamala will raise them). The second is China; both parties are tough on Beijing, but obviously Trump is itching for a trade war. Experts say this should be a LOT more beneficial for India even if slightly negative for some sectors. Overall, this ‘Trump trade’ narrative will be the biggest short-term trigger for India’s markets.

FYI - Emkay points out that a Democrat sweep could “trigger nervousness in global equities and leave India somewhat vulnerable”. A Trump sweep however could spark a “short-term rally for Indian equities”, but valuations + earnings will obviously decide whether momentum is sustained. 

Coming to sectors, there’s a LOT more at play. Here’s a quick look:

1) IT sector: Multiple headwinds for both a Trump and Kamala victory. A Democratic win could see higher tax rates, which would affect tech spending. Trump being tougher on immigration could lead to more onshoring, which would hurt margins. Not so great in the medium-term on the election front.

2) Pharma: Both parties are pro-generics, which is a positive for Indian firms. But the Republicans want to increase competition in the generic biz (a negative). The Democrats on the other hand want to increase approval rates for first-time generics (a BIG positive). 

3) Power/Solar: Both parties are cracking down on Chinese exports and investing in energy infra. But Trump has the edge here with a bigger anti-Beijing focus even though the Republicans may want to withdraw a tax credit for residential solar units.

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