Sensex to be under pressure as Trump vows to 'Buy American, Hire American'

The 45th President of the US swore into office on January 20, vowing to 'Buy American and Hire American', a diktak that may weigh on the domestic markets on Monday.

In a bid to bring prosperity and jobs back to the country, President Donald Trump has not moved away from the conservative slogans of Candidate Trump, something that a lot of experts were rooting for.

On Monday, Asian shares were on the defensive, Reuters said, as worries about President Donald Trump's protectionist policies outweighed optimism that he will follow through on promises of tax cuts and other stimulus.

"Japan's Nikkei dropped 1.3% while shares in South Korea and Australia dropped 0.3%, though dollar-denominated MSCI's broadest index of Asia-Pacific shares outside Japan was flat. US stock futures dipped 0.2%, erasing gains made on Friday," the report said.

In the domestic market, the 30-share BSE Sensex closed down 274.10 points of 1% at 27,034.50 while the 50-share National Stock Exchange Nifty closed 1.02% down or 85.75 points lower at 8,349.35 from their previous closes.

Trump's inaugural speech which was conceived as conservative, coupled with his Administration saying that his office would soon pull out of the 12-nation Trans-Pacific Partnership trade pact and start the talks to renegotiate the North American Free Trade Agreement (NAFTA), may weigh on the markets.

While the benchmark Sensex and Nifty may open higher on lower level buying in early trade, they may fall prey to the weakness in the global markets intraday.

The indices are likely to be dragged down by IT and pharmaceutical stocks, businesses that are likely to be most vulnerable under Trump. The 45th US President recently voiced concerns about high drug prices and brining drug manufacturing back to the US. Adoption of the Republican party's Border Adjustment Tax which seeks to tax imports and subsidise exports, will also be on the radar for investors. Tighter H1-B visa norms as he tries to give a boost to American jobs will weigh on IT companies.

"Analysts suggest investors should adopt a 'wait-and-watch' approach before taking aggressive bets on the stocks. There may be pressure on prices and margins for the sector in the US market, considering Trump's comments earlier, an analyst said. Although, we have to wait for more cues from his speech at his swearing-in today, and his actions in the coming days, an analyst said," a report from Cogencis said.

Asian Paints, Karnataka Bank Tata Communications, GSFC, JM Financial, are slated to announce their third quarter earnings today.