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Donald Trump Vs Kamala Harris: The uncertainty around the next US President is worrying not just Wall Street but the domestic markets as well
Kamala Harris and Donald Trump (Reuters)
US Election 2024: Nifty futures are little changed, suggesting a flat start for local stocks. There’s caution as investors await the outcome of a tight US Presidential election. The Fed’s rate decision later this week will also be closely watched. For now, Monday’s selloff, which pushed the Nifty below the crucial 24,000 mark, has left investors on the edge.
The US betting markets have meaningfully repriced in former President Trump’s favor in recent weeks, alongside some notable shifts in swing state polling.
What Will A Red Sweep Mean For The Nifty Bulls?
A Red sweep may trigger a short-term rally for Indian equities, but sustenance will depend on valuations and earnings momentum.
“We think it’ll quickly fizzle out and our base thesis of market consolidation for 2HFY25 stays unchanged. IT (lower corporate tax rates = higher budgets and BFSI (higher for longer rates) are possible beneficiaries, but these would also be transient,” Emkay Global said.
As India is largely a domestic demand-driven economy, the negative growth spillover from weaker US growth should be limited.
On the contrary, 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, Nomura analysts said.
Trump victory would be seen by markets as inflationary, possibly leading to a more cautious Fed and a strong dollar.
Donald Trump Win To Boost These Indian Sectors
Auto, solar, and chemicals stocks eye Trump win.
Shares of auto ancillaries, solar panel producers, and chemical makers are facing a tough time right now as the earnings outlook for these industries take a hit. However, there may be a reprieve, depending on the verdict of the closely contested US Presidential elections. JM Financial suggests that if Donald Trump wins, it could give these industries a boost. Trump’s plan to raise tariffs on Chinese companies would allow Indian firms to price their exports to the US more competitively, creating a potential opportunity for growth.
What if Kamala Harris wins?
A Harris victory could imply an unchanged framework for both the global economy and the US economy.
“In such a scenario, the prospect of a global ‘soft-landing’ with US growth converging towards the rest of the world could underpin medium-term price action. Fiscal policy would be expansionary but not to the extent expected in case of Trump that implies lower yields than otherwise,” ICICI Bank said.
However, the impact on equity markets, energy prices, gold prices, base metal prices, and the global USD could be neutral, it said.
If Harris comes to power, it would be a non-factor, essentially an extension of the policies of the incumbent President Joe Biden, analysts said.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
