Post Democrat Joe Biden’s victory in the US Presidential Election 2020, the positive global cues have steered the Indian market on Monday. At 7:00 am, the SGX Nifty was trading 184.00 points or 1.50 percent higher at 12,449.50, indicating a positive start for the Sensex and Nifty50. At 9:15 am, the Sensex opened 0.91 percent, or 380.91 points, higher at 42,273.97, while the Nifty50 index opened at 12,399.40, up 135.85 points, or 1.11 percent later it touched 12,451.80.
Gains in banking heavyweights lifted Bank Nifty more than 1,5 percent higher. Broader markets also have benefited with Nifty Smallcap100 and Nifty Midcap100 indices up 0.70 percent each. All the sectors traded in the green led by Nifty Private Bank, Nifty IT, Nifty Pharma and Nifty Financial Services. Divi’s Laboratories, ICICI Bank, HCL Technologies, IndusInd Bank and Infosys were the Nifty50 top gainers, while ITC and Coal India were the only ones to trade in the red.
Jefferies and Morgan Stanley have predicted a rise in the target price of ITC (Imperial Tobacco Company of India). Lockdown may have impacted cigarette sale but valuation appears to be compelling at current levels. Cipla is set by Jefferies with a raised target price of Rs 949 per share, as COVID-19 products now take a share of 5 percent of Indian sales and respiratory monetisation in the US is gaining momentum. Jefferies has escalated target price of Divi’s Laboratories to Rs. 3,772 per share, as well as places to accept investment opportunities from higher pharma outsourcing in India.
Asian shares and US futures jumped up post the final announcement of Joe Biden as President-elect. Strong Chinese trade data released over the weekend aided this boost, as many in the region expect trade tensions to de-escalate under a Biden presidency. Most market participants are hoping that a Biden regime shall be accompanied with a conducive environment for the growth of Indian markets, especially IT and domestic financial markets. Foreign institutional investors have bought Indian stocks worth over ₹10,000 crore, in the previous two sessions. Investors are hoping that a rift in Washington would hopefully curb major tax increases for large companies as well as other sweeping policies feared by investors. These hopes are pinned on the assumption that after Biden’s win, the House of Representatives is controlled by Democrats while Republicans hold major clout over Senate.
Q2 results have also surpassed expectations, hence, Indian companies are likely to outperform. Bihar elections are also being conducted and investors will also focus on industrial production and inflation data, scheduled to be announced on Thursday. The biggest IPO to be released by the pharmaceutical company in India, Gland Pharma’s IPO of over 6,500 crore shall also close on Wednesday adding a further push to the growth of the Indian market.
Analysts are optimistic that emerging markets, including India, shall continue to attract global investments as long as global central banks maintain ultra-loose monetary policy stance to boost growth and revive economies amid the COVID-19 led disruptions. So far this year, foreign institutional investors (FIIs) have pumped nearly $6.66 billion in the Indian stock market.
