Sensex, Nifty: Why stock market is rising ahead of Donald Trump oath ceremony today

Stock market indices Sensex and Nifty climbed on Monday afternoon ahead of the US President-elect Donald Trump's swearing-in ceremony later in the day. Stocks gained as Trump reportedly said he had a ‘very good’ telephone call with the Chinese President Xi Jinping and that the outcome was positive. This eased concerns over likely US-China trade tensions and raised hopes of a reversal in the Trump trade, which led the selloff in emerging market (EM). Dollar eased against global currencies and helped rupee recover 15 paise earlier today.

The BSE Sensex stood at 604.54 points or 0.79 per cent to 77,223.87. Nifty stood at 23,335.35, up 132.15 points or 0.57 per cent. Gains were led by banking and financial stocks such as Kotak Mahindra Bank Ltd, HDFC Bank Ltd, Bajaj Finance Ltd and State Bank of India Ltd.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said: "Globally stock markets will be in a wait and watch mode as Trump 2.0 unfolds today. Many executive actions, particularly on immigration, are expected from the President starting from day one. Markets will wait and watch for the nature of the decisions and their likely impact. Trump had announced that he had a ‘very good’ telephone call with the Chinese President Xi Jinping and that the outcome is positive. This indicates that initially Trump would go slow on tariffs and would prefer to negotiate."

Shares of Kotak Mahindra Bank Ltd climbed 9 per cent in Monday's trade, following its December quarter results. In the process, the stock beat Maruti Suzuki India Ltd and Mahindra & Mahindra Ltd in the market capitalisation (m-cap) race. The stock climbed 9.22 per cent to hit a high of Rs 1,920.85 on BSE.

Shares of Vodafone Idea Ltd Bharti Airtel Ltd and Indus Towers Ltd climbed up to 10 per cent in Monday's trade, following reports the government is working on a potential partial waiver of AGR dues, which would bring down the liabilities of Bharti Airtel Ltd and Vodafone Idea Ltd (VIL) by Rs 38,000 crore and Rs 52,000 crore, respectively. Reports suggest the relief could be announced as soon as February 1, in Union Budget 2025.

One 97 Communications Ltd (Paytm) edged 0.68 per cent lower at Rs 893.50. The company reported a narrowing of losses at Rs 208 crore for the December quarter compared with Rs 222 crore in the corresponding quarter last year. Revenue for the quarter fell 36 per cent YoY to Rs 1,828 crore compared with Rs 2,850 crore in the same quarter last year. This was in line with Street expectations.

RBL Bank Ltd fell 0.71 per cent to Rs 154 following 86 per cent slide in the December quarter net profit on higher provisions due to weakness in the micro finance segment. A few analysts believe the stock could stay under pressure in the short-to-medium term, as the bank expects the slippages to be broadly similar in the March quarter compared with the December quarter.

On the recent stock market, Krishna Appala, Senior Research Analyst, Capitalmind Research said crrections like these are an opportunity to evaluate portfolio and ensure one is holding onto resilient companies.

"The key is to focus on companies with strong fundamentals, sectoral tailwinds, government policy support, and long-term growth potential. The principle is straightforward: Hold tennis balls and sell eggs. Ask yourself for each stock in your portfolio: Is this an “egg” that will crack under pressure or a “tennis ball” that bounces back stronger? Here’s how to reassess your portfolio," Appala said.

Nomura India noted that a mix of strong dollar, higher yields, concerns over Trump’s policies led to recent rupee fall and the shift to a more flexible forex regime on forex reserves losses. There are also broader concerns over domestic growth softness.

"Has there been a shift in RBI’s FX policy? Yes, the RBI appears to now be allowing for more FX flexibility (especially to the upside) to slow the drain on its FX reserves. That said, it has yet to be seen whether this represents a complete shift in the RBI’s FX policy stance under the new governor. Through H2 2025, we see drivers for a softer broad dollar, but Trump may underperform against its trade partners," Nomura said.

Emkay Global in a recent note said FPI selling should abate by Q20025as it sees the dollar rally petering out after the Trump inauguration, given minimal risk of a full-blown trade war.

"Moreover, India's earnings downgrade cycle should be done by then, and the froth in valuations has also subsided. We don't see aggressive FPI buying returning, though. We remain structurally bullish on domestic flows into Indian equities (link to note - Link). 1QCY25, however, could see extreme volatility and spells of intense selling until the dust settles around the geopolitical uncertainty," it said.