US stock market rallies following US elections; impact expected on Indian market

According to a report by TV9 Gujarati, a sharp surge was witnessed in the US stock market on Wednesday. A reliefful atmosphere was created in the market due to a major victory for the Democratic Party in the midterm elections and President Donald Trump's acceptance of the election results. As the uncertainty surrounding the election dissipated, investors engaged in large-scale share buying.

The Democratic Party has secured a majority in both houses of the US Congress, the Senate and the House of Representatives. Additionally, this party has also recorded victories in gubernatorial elections in several important states, including Texas. Following these results, the Democrats are now in a position to exercise control over the policies of the Trump administration. The market expects that the strong presence of Democrats in Congress will bring balance to policymaking. Previously, Trump had reduced taxes to boost business, but inflation had risen due to his tariff policies and the possibility of conflict with Iran.

In Wednesday's trading, the Dow Jones Industrial Average rose by more than 1,200 points. The S&P 500 recorded a jump of 1.73% and the Nasdaq Composite rose by 2.16%. In this rally, large tech companies such as Google, Microsoft, Amazon, and Apple saw increases of up to approximately 8% in their shares.

Donald Trump told The New York Times that he is ready to accept the election results. He told The Wall Street Journal that he and the Republican Party wish to work together with the Democrats. Jay Woods, Chief Market Strategist at Freedom Capital Markets, stated that the President's initial stance was one reason behind the rally. He added that a state of political gridlock in the government could be beneficial for the markets.

However, concerns have increased for Artificial Intelligence (AI) and data center companies. Following the victory of Democrat Gina Hinojosa in Texas, a promise has been made to immediately halt the construction of data centers, which could bring pressure to this sector. Under this impact, Nvidia's share remained in loss, while CoreWeave's share declined. Softness was also observed in the shares of Elon Musk's SpaceX, which has its headquarters in Texas.

There is a possibility of a positive impact on the Indian market. There are indications that the Indian stock market will start positively on 5 November 2026, and GIFT Nifty was also showing gains. On Wednesday, foreign institutional investors (FPI) invested ₹7,284 crore in the Indian market. Additionally, as the price of Brent crude oil decreased to approximately $93.50 per barrel, India's import costs may decrease.

On the other hand, pressure may come on Indian IT stocks due to concerns regarding AI and tech companies in America, leading to a 1.5% decline in the Nifty IT index on Wednesday. In the coming days, the market movement will depend on FII buying, the status of the rupee, and local factors.

Andrew Slime of Morgan Stanley Investment Management stated that the market prefers political gridlock because it does not grant excessive power to any single party. He added that if Middle East conflicts are resolved, oil prices will fall, which will reduce pressure on the Federal Reserve and help control inflation.

Historically, when there is a balance of power between both parties in the US government, the stock market performs better because it becomes difficult to bring about major policy changes or new regulations.