The financial markets are watching the US Presidential Election with bated breath. The street is however divided on who could ring in higher gains. While Trump seems to promise active rate action, Harris offers stability- all eyes on the market verdict.
The election for the next US President is underway. While there is no clear correlation between the US Presidential election and the Indian markets, the policies of the new government do impact the extent of the return and how the stocks pan out. As a result, you will see that there is a sense of apprehension in the market.
In many ways, the results of the US election are also set to determine the direction of flows to the emerging markets including India, the dollar’s strength and the rate action from Central Banks globally. As a result the overall impact on the economy is expected to also steer the Nifty and Sensex.
Can Trump mean good news for India?
The outcome of the US Presidential elections seems too close to call as of now. Dhiraj Relli, MD & CEO of HDFC Securities pointed out that “from a medium-term perspective, Trump may be good for India and Indian markets due to the domestic demand-driven growth model and benefits from lower commodity prices, supply chain shifts, and foreign policy. Lower commodity prices owing to the hit to China’s growth and lower oil prices, due to a greater push towards fossil fuels, could be a macro tailwind for India.”
He added that a “win by Harris could be largely neutral for the global economy, equity markets, energy prices, gold prices and base metal prices. A Harris win will also mean it is easier for highly skilled immigrants to work in the US, which will be a positive for the Indian IT sector. A Trump win could cloud the prospects for the Indian IT sector for some time. Trump’s noise on the reported India’s high tariffs will come to test if he comes to power.
He however pointed out that, over the past eight decades the S&P 500’s SPX annualized total return (inflation-adjusted) has been 11.0% in years when a Democrat is President and Congress is Republican-controlled.
Gains or losses could be sector-specific
The 2024 US Presidential election between Kamala Harris and Donald Trump is too close to call,
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