Trump or Kamala? Markets want to know before deciding next move

Today’s trading session begins with signals that the market could face further declines. The US presidential election is being held today, and its outcome will be crucial for global markets. The picture should become clearer by tomorrow afternoon, but until then, markets are expected to remain volatile, with key questions about the winner and whether they will secure majority support in the Senate and House of Representatives.

In addition to election uncertainty, the US Federal Reserve’s interest rate decision on Thursday will be another key factor influencing market sentiment. The approach taken by the Fed could have a significant impact on investor confidence.

A recent PMI survey indicated that India’s manufacturing sector showed signs of revival in October. However, this positive data is unlikely to offer much relief to the markets, which are weighed down by other growing concerns and uncertainties.

The weaker rupee and continued foreign selling are also contributing to the market’s decline. On Monday, foreign investors sold off shares worth ₹4,329.79 crore in the cash market. Domestic investors, however, stepped in with buying activity, with institutions and Indian mutual funds purchasing shares worth ₹2,936.08 crore.

Global markets under pressure

European markets also closed lower on Monday, primarily due to the uncertainty surrounding the US elections. Similarly, US markets ended the day in the red. The Dow Jones Industrial Average dropped by 257.59 points (0.61%) to close at 41,794.60, while the S&P 500 fell by 16.11 points (0.28%) to 5,712.69. The Nasdaq lost 59.93 points (0.33%), ending at 18,179.98.

US futures were slightly lower this morning, as investors remained on edge ahead of the election. The Dow, S&P 500, and Nasdaq all posted marginal declines.

Market history suggests that stocks tend to fall in the week following an election, before rebounding over the next couple of months. Investors are particularly keen to see if the party of the elected president will gain a majority in both the Senate and House of Representatives. There is also growing confidence that the US Fed will announce a quarter-percentage-point interest rate cut on Thursday.

Asian markets showed a mixed performance today. The Nikkei in Japan rose nearly 1% this morning, while other indices faced losses.

Indian market faces continued weakness

Back home, Indian markets struggled to recover from Monday's losses. The Nifty dropped by 309 points (1.27%) to close at 23,995.35, while the Sensex fell by 941.88 points (1.18%) to end at 78,782.24. The Bank Nifty ended 0.89% lower at 51,215.25. 

All sectors closed in the red, with oil & gas, realty, media, FMCG, metals, financial services, consumer durables, and auto stocks suffering the most. 

On a positive note, Kitex Ltd. saw a sharp jump, rising by 5% to reach ₹643.95, marking a 218% rise over the last six months. Federal Bank also had a strong day, closing at ₹203.80 after touching a record high of ₹207.60. The stock has gained 43% over the last year, with analysts like Nuwama setting a target price of ₹235 and Centrum Broking at ₹250.

The immediate support for the Nifty is seen at 23,850 and 23,735, with resistance levels at 24,235 and 24,350. Analysts are concerned about the possibility of the Nifty falling to 23,500, especially after breaking key resistance levels. The upcoming US election results and the Federal Reserve's interest rate decision on Thursday will likely steer the market in the days ahead.

For Bank Nifty, the immediate short-term support lies at 51,000. If the index breaks below this level, further downside is expected. On the upside, resistance is seen at 52,200.

Gold update

Amidst the political and economic uncertainty, gold prices saw a slight uptick on Monday. The yellow metal closed at $2,737.10 per ounce, up by $0.60. It was trading slightly lower at $2,735 this morning. In Kerala, gold prices remained steady at ₹58,960 per 8 grams.

Silver traded at $32.32 an ounce, while crude oil prices saw a slight rise. Brent crude settled at $75.13 per barrel, with WTI crude at $71.35 and UAE Murban crude at $74.13. Crude oil markets are awaiting OPEC Plus’s decision on production cuts.

The US dollar index closed at 103.89, down by 0.39%. The rupee weakened against the dollar, ending at ₹84.12, as continued foreign selling and a higher dollar index put pressure on the Indian currency.

Cryptocurrencies continued their downward trend, with Bitcoin falling over 1% to below $67,850. Ether was trading at $2,400.

Industrial metals saw mixed movements today. Copper rose by 0.63% to $9,504.50 per tonne, while aluminium also gained 0.63%, reaching $2,616.64 per tonne. Tin rose by 0.20%, but other metals, including lead, nickel, and zinc, saw declines. Investors are awaiting potential new stimulus measures from China, as well as clearer direction from the US elections.

Market indicators (November 4)

- Sensex: 78,782.24 (-1.18%)
- Nifty 50: 23,995.35 (-1.27%)
- Bank Nifty: 51,215.25 (-0.89%)
- Dow Jones: 41,794.60 (-0.61%)
- S&P 500: 5,712.69 (-0.28%)
- Nasdaq: 18,179.98 (-0.33%)
- Gold: $2,737.10 (+$0.60)
- Crude Oil (Brent): $75.13 (+$0.96)
- Dollar: ₹84.12 (+₹0.04)
- Dollar Index: 103.89 (-0.39%)