Sectors likely to gain with Trump’s Returns

Sectors likely to gain with Trump’s Returns.

With Trump’s return to the US White House after a general win in the US Election 2024, Indian Stock Market is expected to rally at least for the short term. Market experts have given similar views. So we are trying to cover some sectors that are likely to gain with Trump’s victory.

Pros of Trump’s Win for India

• Since Trump won, several Indian export sectors will come out as winners since an increase in tariffs on China will make it easier for Indian manufacturers to sell items in the U.S. market. Indian companies shall have a competitive advantage for auto parts, solar equipment, and chemical production.

• Lower energy costs might come through the fossil fuel policies of Trump and the slowing of the economy of China. Some of the best gainers are as follows: Indian Oil, HPCL, BPCL, IOC, and Gas Distribution firms IGL and MGL.

• The manufacturing and Defense sectors can rise further because the focus of Trump lies in the development of U.S. Industries and this, again will favor companies that work between these two countries which include ABB, Siemens, Cummins, Honeywell, GE T&D, and Hitachi Energy.

• International tensions would be easily resolved to enhance the efficiency of supply chains for Indian businesses under Trump. He might strengthen the muscles and might of U.S. manufacturing and the military, which could be a great opportunity for Indian defense companies like Bharat Dynamics and HAL.

• The business climate, under Trump, will improve Indian equity markets. Lower corporate taxes, fewer regulatory requirements, and more business-friendly policies are likely to follow.

Cons of Trump’s Win for India

• It may result in inflation during Trump's presidential term, since interest rates may have to be hiked for such circumstances, and the cost of materials and equipment imported from the US may result in raising. According to economic experts, these policies which Trump is providing under his umbrella of tariffs, deportation, and deficit spending can increase inflationary pressures due to price movements to raise immediately and wages also due to adjustment.

• Trump has criticized India for its trade policy and has suggested reciprocal tariffs. His administration would possibly ask India to reduce trade barriers, which may affect the IT, pharmaceutical, and textile sectors. His effort to reduce dependence on China for manufacturing would, however, help India.

• Under Trump, an increased fiscal deficit for the US might push higher global inflation rates and, potentially, rates of interest, which then would force against the emerging market's monetary policies. However, India's economically domestic-oriented economy does slightly shield it, and whilst Harris will continue status quo economic policy frameworks, it doesn't feel like that would make one bit of difference either way towards the economy.

• This may create a stronger dollar for the US and, through tax cuts and fiscal measures, higher bond yields, thereby attracting capital from all over the globe into the US. As a result, the currencies of emerging markets like India are going to weaken. As a result, a rise in the import expenses for India, especially oil, will push up domestic inflation.

• Though Trump's policies have been successful so far in earning markets, uncertainty might keep the market unstable for a longer period. US markets have performed well in comparison to Indian markets in the first term since Nasdaq has gained 77% as against 38% Nifty.

• The H-1B visa restriction during Trump led to higher rejection rates and increased costs of H-1B for Indian IT companies. Their hiring in the US and green card holders reduced their vulnerabilities to future immigration restrictions.

Sectors likely to gain with Trump’s Returns.

Conclusion

In a nutshell, the potential return of Trump to the White House can benefit different sectors in India in manufacturing, defense, energy, IT, and exports. Such will easily find their way to the U.S. market and increase gains. The possibility of increased inflation, more interest rates, and more dollars will raise the costs of importing goods into the country for some of these sectors, hence limiting gains. This opportunity also has some associated challenges: friction from changes in trade policies and restricted access through visa policies. In the short term, the growth is likely to continue in India, while its long-run stability would remain in suspense.

Disclaimer- No investment advice or suggestion is given. No buy or sell recommendation. Sectors may overperform or underperform depending on various market factors. Discuss with your eligible financial advisor before investment.