Indian stock markets opened with a severe selling pressure on Monday bucking BJP's win in Delhi Assembly Elections as the Trump tariff threat on metal imports spooked the traders at Dalal Street as the move could potentially lead to the dumping of steel and aluminium items in markets such as India. However, domestic brokerage firm JM Financial believes that BJP’s decisive mandate in the Delhi election is a sentimental positive and has potential to attract FIIs inflows.
BJP's win was on the back of the prevailing anti-incumbency sentiments in the state. Although the exit polls had accurately predicted the election results in favour of the BJP, the actual seat wins were significantly higher at 48 out of the 70-seat assembly, said JM Financial.
"The incumbent AAP was restricted to 22 seats while Congress gained none. BJP’s vote share improved to 45.6 per cent while it slipped in the case of AAP. The decisive mandate in Delhi along with comfortable wins in Haryana and Maharashtra, allays fear which had set-in post the lower-than-expected mandate for BJP in the General Elections 2024 and hence would be sentimentally positive for the markets," it said.
Indian benchmark indices BSE Sensex and Nifty50 index dropped nearly a per cent during the trading session on Monday. BSE Sensex cracked more than 750 points, or 0.97 per cent to 77,106.89, while NSE's Nifty50 crumbled 228 points, or 0.96 per cent to 23,316.30 for the day. BSE midcap and smallcap indices cracked about 2 per cent each for the day.
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 470.39 crore on Friday, taking the total exodus from local stocks to Rs 7,342 crore for the first week of February and Rs 85,369 crore in 2025 so far. On the other hand, domestic institutional investors (DIIs) turned net buyers of Indian equities to the tune of Rs 454.20 crore.
The decisive mandate in favour of the BJP in Delhi assembly election would be sentimentally positive for the markets and could act as a trigger to attract FII flows, JM added. However, the possibilities of FIIs returning to the Indian markets appear to be bleak considering the rampant depreciation of the Indian rupee, which is hovering around the all-time low of Rs 88 per US dollar.
On the other hand, another brokerage firm Motilal Oswal is positive on abroad swathe of sub-segments of consumption after the proposed rate cuts, which could be key beneficiaries of the same. It includes names like , discretionary, retail, jewelry, hotels, apparels, 2W, entry-level 4W, and also capital market plays to some extent. "We recommend a selective approach toward Industrials," it said.
Motilal Oswal is 'overweight' on consumption, IT, BFSI, industrials, healthcare, and real estate, while we are 'underweight' on oil & gas, cement, and metals.
From the largecap pack, Titan, M&M, Maruti, ICICI Bank, SBI, HCL Tech, Bharti Airtel, L&T, Sun Pharma, Trent, HUL and Dixon Tech are its top picks, while it prefers Indian Hotels, Page, Cummins India, BSE, Godrej Properties, Coforge, Metro Brands, IPCA Labs, Angel One, and JSW Infrastructure from the mid & smallcap basket.