All of the profits achieved the previous day on the Trump trade were erased as the stock market indices, the Sensex and Nifty, plummeted more than 1% in Thursday's trading. Stocks slumped, as concerns over disappointing Q2 profits and lofty valuations came back to haunt investors. Additionally, fewer Fed cutbacks would result from a Trump win. Today marks the end of the FOMC's two-day policy review.
Despite optimism that Donald Trump as the next President would slash US corporation rates and improve US spending, it is thought that volatility will only worsen in his tenure.
With selling in private lenders like ICICI Bank, HDFC Bank, oil-to-telecom giant Reliance Industries Ltd, and IT giant Infosys Ltd, the BSE Sensex was down 848.48 points, or 1.06 percent, at 79,529.65. At 24,208, the Nifty also dropped 276 points, or 1.13 percent.
Since Indian market valuations are high and there are concerns about an earnings slowdown, the "Trump trade," which has dramatically boosted US markets overnight, is unlikely to have a comparable favorable effect in India. In this time of excitement and uncertainty, investors should focus on quality and value, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
According to Nomura, early in a second Trump administration, economic policy will be centered on taxation and tariffs. It stated that tariffs are expected to have an adverse effect on growth and cause inflation.
"With policy on hold until the realized inflation shock from tariffs has dissipated, we now anticipate only one Fed cut in 2025. Although we anticipate more reduction in 2026, we have increased our prediction for the terminal rate from 3.125 percent to 3.625 percent. Under united administration, the fiscal situation is expected to worsen," it stated.
According to Nuvama, domestic stock prices are rather high, and the momentum behind results is waning. Market volatility would only rise in response to a rise in bond yields or a decline in international trade. It pointed out that although stock markets were very bouncy throughout the first year of Trump's presidency in 2017, this was supported by positive global growth, strong earnings, and fair values. However, tax cuts in 2018 undid the surge, causing midcaps to drop 20–30%. Thanks to rising US corporate investment and currency devaluation, the IT sector had the greatest year in 2018, according to the report.
According to PhillipCapital, the Nifty has dropped 8% from its most recent peak as a result of significant FII inflows and worries about a slowdown in GDP. The brokerage encouraged investors to take advantage of these dips as a buying opportunity and maintained its structural optimism regarding the Indian economy and stocks.
Taking into account Trump victory, they include IT equities like Infosys, LTI Mindtree, and Coforge; NBFCs like Muthoot Finance, Shriram Finance, and Bajaj Housing Finance; and banks like ICICI Bank, Axis Bank, HDFC Bank, and SBI.
It favors Cummins, Siemens, and L&T among industrials. In the defense industry, the brokerage favors BEL, Data Patterns, and HAL. In the metals industry, it favors NMDC, Nalco, and SAIL; in the cement industry, it favors Ultratech, JK Cement, and Ambuja Cements.
It prefers Sun Pharma, Aurobindo Pharma, and Dr. Reddy's Labs among pharmaceutical names. PC's top recommendations for automobiles include Hero Motocorp, TVS Motor, Maruti Suzuki India, and Bharat Forge.
According to Antique Stock Broking, their September 2025 Nifty 50 goal of 26,500 remains unaltered. "Overall, we believe that the policies of the new US government may be positive for Indian sectors like IT services, MNC industrials, defence, textiles, oil marketing companies, city gas distribution; neutral for pharma; and negative for metals", it stated.
