Indian stocks rose on Wednesday, November 4, extending their longest winning streak in nearly five months as foreign investment returned and Asian technology markets suffered sharp losses. The Nifty 50 gained 0.63% to 23,960.6, while the BSE Sensex advanced 0.5% to 77,301.4. Both benchmarks gained about 5.6% over five sessions, supported by hopes for capital gains tax relief and renewed foreign buying.
According to Reuters, The gains contrasted with losses across major Asian markets following early US midterm election results. Investors assessed how Democratic control of Congress could affect President Donald Trump's policies, particularly those involving artificial intelligence and trade.
Japan's Nikkei 225 fell 4.05% by midday, while South Korea's KOSPI declined 3.29%. Taiwan's TAIEX also dropped 3.11%, reflecting pressure on technology companies.
India initially followed the regional decline before recovering. The Nifty 50 reached 23,850.35 during the session, up 0.17% from Tuesday's close, before extending its advance.
Consumer and financial shares supported the recovery. The Nifty FMCG index gained 1.05%, while the Nifty Financial Services index rose 0.50%.
Unlike South Korea and Taiwan, India's equity market has less direct exposure to AI hardware. That difference helped limit its exposure to the regional chip selloff.
Foreign investment provided another source of support. Overseas investors purchased Indian shares worth USD 821 million since November began, reducing their annual net withdrawals to USD 30.59 billion.
The recent purchases followed months of selling as global funds shifted toward technology opportunities in South Korea and Taiwan. During the final two weeks of October, foreign investors bought approximately USD 2 billion in Indian equities, according to Bloomberg.
The change in flows came alongside renewed attention to India's capital gains tax rules. Finance Minister Nirmala Sitharaman pledged to consider investor concerns about taxes on stock market profits.
India currently charges a 12.5% tax on long-term capital gains from listed shares and 20% on short-term gains. Sitharaman acknowledged that foreign withdrawals had changed market conditions.
"The situation is very different now. Circumstances have changed, challenges have grown, more FII outflows have happened," she said. Her remarks helped support Tuesday's rally, when the Nifty gained 1.58% to reach 23,810.85. That marked its fourth consecutive advance and a two-month high.
Still, the government has not announced a timetable for changing capital gains taxes.
The US midterm elections added another factor to India's market recovery. Democratic gains raised expectations of stronger congressional scrutiny of Trump's trade and economic policies.
Democratic control of both congressional chambers could reduce expectations of further US trade restrictions. A weaker dollar could also support the rupee and make Indian assets more attractive. India continues negotiating a trade agreement with Washington. Meanwhile, Trump's tariffs and restrictions on H-1B and student visas have complicated relations between the countries.
Nabil Milali, portfolio manager at Edmond de Rothschild Asset Management, cautioned that Democratic victories would not automatically produce major policy changes. He noted that Trump retains presidential veto powers, allowing him to block legislation he opposes.
Meanwhile, Indian equities continue trading at their widest relative underperformance against emerging-market peers in more than three decades, according to Bloomberg.
Oil prices present another challenge. Brent crude near USD 103 per barrel raises costs for India, which relies heavily on imported oil. Foreign investment trends, US trade negotiations and the government's pending tax decisions remain important factors for Indian markets.
India's Nifty 50 extended its rally as foreign investors returned and Asian chip markets faced heavy selling. Expectations of capital gains tax relief also supported domestic shares. Yet annual foreign outflows remain substantial, while high oil prices, unresolved US trade negotiations, and uncertain tax changes continue to affect market conditions.