The U.S. midterm election results moved markets but not in a straight line.

WHAT HAPPENED?

Democrats Won Control of Congress
The U.S. midterm elections were held on 3 November 2026.Democrats won control of both the House of Representatives and the Senate, while Republican President Donald Trump remains in the White House.This creates a divided government; the President and Congress are controlled by different parties.Why does this matter?Major changes in areas such as:

• Taxes
• Government spending
• Technology regulation
• Energy policy
• Trade

may now require more negotiation between the White House and Congress.

DAY 1: MARKETS FIRST RALLIED

November 4: Investors Welcomed Political ClarityThe first market reaction was positive.
On 4 November:
Dow Jones: +3.0%
S&P 500: +1.6%
Nasdaq: +1.4%The Dow gained more than 1,500 points in one session.Why?Investors expected a divided government to make large or sudden policy changes more difficult.But not every sector gained.The Philadelphia Semiconductor Index fell 3.1%, showing that concerns around AI and technology were already building.

BONDS, DOLLAR, GOLD & OIL ALSO MOVED

The Election Was Felt Beyond StocksOn 4 November:U.S. 10-Year Treasury Yield: fell about 6.6 basis points to 4.88%U.S. Dollar Index: fell 0.23%Gold: rose 3.49% to about $4,066/ozBrent Crude Oil fell nearly 9% to $94.62/barrelWhy is this important?

• Lower bond yields can support stock valuations.
• A weaker dollar can help emerging markets.
• And lower crude oil prices can benefit large oil-importing countries such as India.

DAY 2: THE STORY CHANGED

November 5: AI Fears Hit Wall Street
Just one day after the post-election rally, U.S. markets reversed sharply.On 5 November:
Nasdaq: −5.52%
S&P 500: −4.36%
Dow Jones: −3.44%The Nasdaq recorded its biggest daily fall in around 19 months.The sell-off was concentrated heavily around AI and technology.Investors became concerned that a Democratic-controlled Congress could bring greater scrutiny of:

• AI infrastructure
• Data centres
• Electricity usage
• Big Tech investment spending

At the same time, investors were already questioning whether massive AI spending would generate enough future profits.

WHAT HAPPENED IN INDIA?

India Moved in the Opposite Direction
Indian markets benefited from lower oil prices and improving foreign flows.On 5 November:
Nifty 50: +2.4% to 24,536.6
Sensex: +2.6% to 79,310.01It was the Indian market's biggest one-day gain in seven months.Sector moves included:
Nifty Auto: +4.1%
Financials: +4.0%
Indian IT: +2.4%The Nifty and Sensex had gained more than 8% over six trading sessions by November 5.

WHY LOWER OIL MATTERS FOR INDIA

India Imports Most of Its Crude OilBrent crude settled at $98.32 per barrel on November 6, up slightly from the previous day. It had fallen to $94.62 on November 4, a drop of about 8.7% from November 3.For India, lower oil can mean:

• Lower import costs
• Less inflation pressure
• Reduced pressure on the rupee
• Lower fuel and transportation costs
• Better margins for some companies

Oil-sensitive stocks reacted strongly.
On November 5:
IndiGo: +5.4%
Asian Paints: +4.4%But oil producers moved lower:
ONGC: −2.1%
Oil India: −4.0%So even within India, falling oil creates both winners and losers.

WHAT SHOULD INVESTORS WATCH NEXT?

The Election Is Over. The Market Impact Is Not.Watch these five areas:1. AI Regulation
Will Congress take a closer look at AI and the growth of data centres?2. U.S. Treasury Yields
Lower yields can support valuations, while rising yields can pressure growth stocks.3. Crude Oil
For India, sustained lower oil prices would be an important macro positive.4. U.S. Dollar
A weaker dollar can support emerging-market currencies and capital flows.5. Foreign Investor Flows into India
The key question is whether the recent buying continues.