Trump vs Harris: US Election & Indian stock market

Trump vs Harris

All eyes are on Republican Donald Trump's victory against Democratic opponent Kamala Harris in the highly anticipated US Presidential Elections 2024, scheduled for November 5. This would determine the future of numerous domestic and global industries that are focused on exports, including textiles, medicines, and IT. Indian Stock market shift would be directly affected in either case. According to experts, it might indirectly affect the industrial, defense, utilities, metals, and oil and gas sectors. 

US Election Results Date 

On November 5, the day of the vote-casting, the vote-counting process will start. The winner is revealed that same evening or the following day. The US presidential winner will hold a term for four years. 

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Experts’ Opinion

Analysts believe that a victory of Kamala Harris will keep the status quo in the economy, with a near-irrelevance implication for markets, while a Trump victory will bring significant ripples within emerging markets, equities, and currencies through a lesser globalization policy.

If Trump is elected President, it may mean more-than-expected rates and more-than-expected gold and even global USD regime than India base-case forecasts, while crude could be lower.

A Harris win may mean that markets might trade closer to our base-case projections with ease for rates and flatness of global USD.

Let’s see the impact of the US Elections on the Indian Stock Market and other Sectors.

 

Trump’s Victory & India

Although tariff uncertainty would result from a Trump victory, stock markets might benefit in the near run. Analysts' opinions on a Democratic return are divided; some predict a fall of up to 5% for domestic markets, while others predict a neutral market response.

Analysts at ICICI Bank expect better performance of the US dollar, Brent crude softening, softer global base metal prices that could impact growth from China, and gold due to its high safe-haven appeal.

Should Trump win, analysts at ICICI Bank expect a probable yield of 4.40-4.50% for US 10-year Treasury; Dollar Index to reach 105-106 and potentially by December 2024 it may reach 106.50.

In fact, such declining commodity prices could be advantageous for India even as the growth in China decelerates and oil prices come down due to increased production of fossil fuels.

Lower crude oil prices will help the Indian oil marketing companies like BPCL, IOCL, and HPCL but may not go well with ONGC, Oil India, and GAIL.

 

Harris’s Victory & India

A Harris victory in the election is more likely to continue with the international and US economic systems but with a gradual economic catch-up of the US from other nations impacting mid-term market conditions.

Equities, energy, gold, base metals, and the dollar are expected to be steady without significant price movement. Suggested by ICICI Bank.

"With Harris in the White House, we should see the UST 10yr move into the 4%-4.10% range and DXY trading in the 101.5-103.5 range by December 2024," said.

Under a Democratic government, Indian export performance to the US might do well as the trade bilaterally has experienced a good relationship with Biden's administration in the previous term. Harris, as per Phillip Capital, is expected to give an impetus to the policies of skilled immigration beneficial to India's IT sector.

 

Who’s the next US President?

Pennsylvania is considered as the main route to Trump’s victory. So whoever wins this seat, is more close to the US President's crown. While many close and internal matter experts are predicting Trump’s victory gain over Harris.

 

 

Sectors to Keep Eye

IT: Domestic IT software exporters on both sides will feel the pinch of margins since more is being onshored. However, a Democratic win would be worse since it would imply higher US corporate taxes, which would be felt in discretionary technology spending.

On the other hand, revoking the MFN status of China by the Republican policy may boost the hiring from Global Capability Centers in India, which will be a positive incentive for IT midcap companies, said Antique Stock Broking.

Pharmaceuticals: Both parties have interests in reducing the cost of prescription drugs. Republican Party plans to increase the competitiveness of the generics business (negative to the US generic pharma cos); and increase beneficiaries of the Medicare program (positive as this benefits increased generic volumes).

Democrat is targeting quick regulatory approvals for first-generation generic medicines (positive for the US generic pharma industry).

Industrials: Donald Trump's focus is on making the USA a global manufacturing superpower, which might benefit MNC industrial companies such as ABB, Siemens, Cummins, Honeywell, GE T&D, and Hitachi Energy that are in the process of becoming important partners in the value chain of their parent companies having a dominant presence in the USA, said Antique Stock Broking.

Oil & gas: The Trump administration is likely to be a proponent of traditional oil & gas (more exploration and drilling and rollback of green energy benefits) in contrast to Kamala Harris's focus on climate and emissions. Under the Trump regime, lower prices of oil and gas are going to be negative for upstream and positive for OMCs like HPCL, BPCL, and IOC and city gas distributors such as IGL, MGL, and Gujarat Gas.

Under Kamala, more penalties/costs may be loaded on oil and gas producers in the form of carbon credit costs.

Defence: One of the positives from the Trump administration would be that the resolution of global conflicts would ease the supply chain for defence companies like Bharat Dynamics and HAL. At the same time, in terms of ensuring America's military is the strongest and best-equipped in the world, this is going to be a positive for India's defence ecosystem.

Historical Post US Election and Indian Stock Market Performance (%)

Disclaimer- The blog is for information purpose only. No claim/promise regarding anything made in this blog. This is not an investment advice. Past performance is not the guarantee of the future returns. Always consult your eligible financial advisor before investing.