Sensex drops 900 points as Trump euphoria fades, focus shifts to Fed rate decision

Stock market today: Sensex and Nifty fell sharply during Thursday's intraday trading session as investors turned cautious ahead of the US Federal Reserve's rate decision.

In Short

• Sensex drops over 900 points, Nifty just above 24,200
• Nifty50 tumbles as investors await US Federal Reserve's rate decision
• HDFC Bank, Reliance, ICICI Bank lead Sensex losses in early trade

Benchmark stock market indices tumbled sharply on Thursday, as the initial euphoria following Donald Trump’s victory in the US presidential election fizzled out. The benchmark BSE Sensex dropped over 900 points in early trade.

At 10:41 am, the Sensex was down 858.03 points to 79,520.10, while the Nifty50 tumbled 281.10 to trade at 24,202.95. This U-turn came after the indices surged by over 1% on Wednesday, marking their biggest single-day gain in more than six weeks, driven by optimism over Trump's election win, which was seen as positive for domestic equities.

However, Thursday’s losses were fuelled by investors turning their focus to the US Federal Reserve's upcoming rate decision, which is expected to provide more clarity on the future trajectory of US interest rates.

Key stocks on the Sensex took a hit with financial giants like HDFC Bank, Reliance Industries, and ICICI Bank among the top contributors to the losses. Sector-wise, Nifty Metal was down 1.3%, dragged by Hindalco, Adani Enterprises, and Vedanta. Other sectors, including Nifty Bank, Auto, Financial Services, Pharma, and Consumer Durables, also opened lower, reflecting broader market weakness.

Only two stocks on the Nifty50 were trading in positive territory. Apollo Hospitals share price surged nearly 7% hitting its all-time high after reporting a 63% YoY jump in net profit for Q2FY25, driven by strong performance in its hospital business. Tata Steel was also up nearly 2% after the company reported a profit in the quarter ending September 2024, reversing a loss from the same period last year.

The shift in sentiment from Trump’s victory to concerns over monetary policy has left analysts divided. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, cautioned that the 'Trump trade,' which had lifted US markets sharply, is unlikely to have the same positive impact on Indian markets. “Indian market valuations are high, and with concerns over earnings slowdown, investors should stick to quality and value stocks in this uncertain period,” he advised.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd highlighted the fact that foreign institutional investors continue to offload their investments from Indian markets, noting that they having pulled out Rs 1.14 lakh crore from Indian stocks in October.

Thursday’s market retreat highlights the shifting investor sentiment post-Trump’s win, with markets reassessing the long-term impact of the US election results. As attention now turns to the US Federal Reserve's decision on interest rates, the stock market is expected to remain volatile today.