The Bitcoin rally does not seem to be stopping anytime soon! Does this spell good news for Indian markets?

Ever since Donald Trump won the 2024 US presidential elections, bitcoin has been surging, going up over 40% in the last two weeks. Recently, the cryptocurrency soared past $97,000, having risen 8.32% in just the last 7 days, and is currently trading at $96,906.09.

The overall crypto market is also buoyant, with the crypto volume jumping 10.06% over the past 24 hours to touch $198.83 billion.

The markets are enthused about Bitcoin's prospects going ahead, given that Trump has hinted towards establishing a dedicated role in the White House for deliberating crypto policies.

Trump has been vocally pro-crypto and had promised, during his presidential campaign, to scale back crypto regulations and fire SEC chair Gary Gensler, who had initiated a crackdown on digital assets in the US. The crypto lobby in the US has been advocating for crypto-friendly SECs and access to banks. In a bid to do so, crypto companies have pumped in over $119 million to support pro-crypto candidates.

Says Edul Patel, co-founder and CEO of Mudrex, "Market sentiment grew stronger from Bloomberg's report of Trump’s plan to establish a dedicated White House role for crypto policy. The anticipation of faster regulatory clarity coupled with BlackRock’s Bitcoin ETF options projecting a $176k price target by 2026 has driven BTC’s price to the $95K milestone and beyond."

The ongoing rally is not restricted to just bitcoin but also extended to Solana and XRP, which gained 10.85% and 59.02%, respectively, over the last 7 days.

But does this mean that good times are coming for Indian markets as well?

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities, notes that bitcoin is a proxy for risk-taking in the markets. Bitcoin moving up means the risk appetite of investors is rising. Conversely, if it falls, then investors prefer safety."

Both Nifty and Sensex have lost over 5% each over the last month. FIIs (foreign institutional investors) have also been scrambling out of Indian markets, having withdrawn Rs 1,14,445.89 crores during October 2024 and offloading Rs 34,348.30 crore so far in November. During trade today, Nifty and Sensex remained in red, with Nifty down by
0.74% and Sensex down by 0.6%.

DIIs (domestic institutional investors) have been trying to keep the market afloat in both October and November, pumping in Rs 31,636.77 crore in Indian markets in November so far. Last month, DIIs infused Rs 1,07,254.68 crore in the Indian markets.

According to an NSE report, by the end of the previous quarter, FPIs holding in NSE-listed companies stood at 36.3%, despite the seventh consecutive quarterly decline. Previously, FIIs holding in listed companies had hit a record high of 39.9% in December 2021.

In contrast, DIIs are increasingly making headway into the Indian markets. Active Domestic Mutual Funds (DMFs) have been increasing their investments in the NSE-listed companies. Their ownership in these companies has risen from 12.4% in December 2021 to 15.7% as of September 30, 2024.

Banks and insurance companies have also expanded their market share. Their ownership in NSE-listed companies has grown from 8.8% three years ago to 11% as of pr quarter.