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Macro Update

Loosing of Trump in the elections has came as Diwali bonus for the markets. Indian equities markets are undergoing a rare mix of tailwinds with US elections results favoring Indian markets, Fall of crude prices, Yields cooling off, strong earnings season and Anti AI trade etc. In the US elections, Democrats secured control of both chambers of Congress, a major setback for Trump. This weakens his policy agenda and lowers the odds of more tariff and geopolitical shocks. Global money is also rotating out of crowded AI trades. Korea and Taiwan, the AI heavyweights, fell 3.72% each on November 3 while the Sensex gained 1.62%. The lesser exposure towards AI and semicon is now acting as boon to the Indian markets

Macro’s are also favoring the Indian markets US Treasury yields are falling, Brent dropped about 6.5% to roughly $94/barrel, and the rupee firmed to around 94.80. Foreign buying has returned, with FIIs buying for a third straight session, after prolonged selling. Over last 1 week FII’s have invested an total amount of Rs 21,000 crores. Nifty at around 24,000 has de-rated from its all time highs significantly and Q2 earnings have been resilient, so FII flows have room to build. We prefer domestic demand plays (financials, consumption, autos) and sectors that gain from lower crude. All the other major Asian markets are trading deep negative with correction of 2-3% where as Gift Nifty indicates a very strong gap up with 335 points on the bourses. Focus on stocks which were thrashed due to high crude prices like Paints, Avaition, Chemicals and fertilizers etc and on the other side will be slightly negative for Data center stocks as there is a global sell off in the AI investments.