US Elections 2024: Indian stock markets extended gains on Wednesday as Donald Trump is all set to reclaim the White House. Bulls are marching on Dalal Street continuing the gains for the second day. The Nifty 50 was up 218 points or 0.90% to 24,432 while the Sensex was up 770 points or 0.97% to 80,245, retrieving the important level of 80,000.
What Trump’s win could mean for Indian markets?
“A Republican-led government under Trump could significantly reshape trade dynamics, with heightened tariffs and a more protectionist approach to international trade,” said Client Associates, a multi-family wealth management firm.
One of the key focal points of Trump’s presidency was reducing the US trade deficit, a policy that heavily relied on increasing tariffs on imports. “While these measures could help shrink the trade deficit, they risk pushing up inflation by making imported goods more expensive. This, in turn, could delay interest rate cuts by the US Federal Reserve, which is already grappling with persistent inflationary pressures,” added Client Associates.
Talking about India, the consequences of such a policy shift could be twofold. First, certain sectors like pharmaceuticals and IT may experience challenges. Indian generic drug manufacturers could face increased tariffs on their exports to the US, affecting the pharmaceutical industry. Meanwhile, India’s IT sector might also see a slowdown in demand, as a trade war and economic slowdown could reduce discretionary spending in the US.
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Taking a bit different stance, Anshul Jain, Head Research Analyst at Lakshmishree Investment and Securities said, “Trump’s support for fossil fuels, coupled with a potential slowdown in Chinese economic growth, could lead to lower commodity prices. This scenario would be particularly beneficial for India’s oil marketing companies like HPCL, BPCL, and IOC, as well as city gas distributors such as IGL and MGL. Lower input costs could translate into better margins and lower prices for consumer.”
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