How could the US presidential elections 2024 affect the Indian stock market?

The US Election 2024 is not an ordinary event. As a major economic and military power, the policies and strategies of the United States can affect everything from economic growth to peace efforts worldwide. The United States’ policies and decisions, as the world’s most powerful country and largest economy, greatly impact global relations, economies, and diplomacy.

The outcome of the US Election 2024 will influence the US foreign policy, trade agreements, defence strategies, and global markets.

The US Presidential Election 2024 could significantly impact India, especially in defence, trade, and strategic relations between the two countries.

The US is a major investor in India, particularly in technology, infrastructure, renewable energy, and manufacturing.

The next US president’s economic policies will directly influence India’s exports, investments, and overall economic growth.

The race between Donald Trump and Kamala Harris is tight, but the latest national polls show Vice President Harris holding a narrow lead over former President Trump as they gear up for the upcoming US presidential election on November 5.

US election and the Indian stock market

The outcome of the US presidential election will affect market sentiment globally. However, even though there could be short-term volatility, experts believe that the market will settle down soon and adjust to the outcome.

A drastic change is not expected in India’s context. However, it may have a notable impact on the India-US bilateral ties in defence, trade, and strategic sectors.

Experts point out that Trump’s economic policies could lead to higher inflation. He wants to put tariffs on imports, which would make foreign goods more expensive, and he is pushing companies to produce more in the US, which could also raise costs.

Trump has often criticised India for its high tariffs, which means India might face new challenges in exporting products like textiles, medicines, and agricultural goods to the US if he brings back his tariff-focused trade policies.

Trump has also taken a tough stance on immigration in the past. During his first term, he made it harder for Indian IT professionals to work in the US by tightening rules for H-1B visas.

Despite the friction over tariffs and immigration, India holds a crucial spot as a key ally in the US’s geopolitical strategy. The future US president will need to carefully weigh their decisions before tightening the screws on India, balancing economic policies with broader strategic interests.

Mint reached out to experts for their perspectives on how the US presidential election might influence the Indian stock market. Here are their insights:

Deepak Jasani, Head of Retail Research at HDFC Securities

The US Presidential Election 2024 could have several implications for India. The key impact would be on the India-US bilateral ties in defence, trade and strategic sectors. The US is a leading investor in India, particularly in technology, infrastructure, renewable energy, and manufacturing sectors.

The next US president’s post-election economic policies will directly affect India’s exports, investment flows, and overall economic growth. 

While in the emerging situation, the US needs India on its side against Russia, China and the like, it would have its own costs. 

Although nearly 47 lakh persons of Indian origin stay in the US, they could only influence the results in a few pockets. 

Collaboration on Climate Change and technology transfer will depend on the stand taken by the new administration on these issues. 

If Harris becomes president, she may carry forward most of the trade policies of the Biden administration, emphasising economic resilience and domestic manufacturing and reducing reliance on global supply chains with minor tweaks. 

Trump has always favoured protectionist trade policies, focusing on America-first principles, which may unwillingly lead to weaker economic growth and rising geopolitical tensions. 

Trump may pursue a more transactional approach with greater scrutiny of the trade imbalance and migration. Trump is known to have blamed India for high tariffs recently. 

India might face renewed challenges in exporting products like textiles, pharmaceuticals, and agricultural goods to the US market, as he may revive his tariff-focused trade strategy. 

However, compared to other Asian countries, India is less dependent on external trade and may be mildly impacted even if trade tensions remain elevated under the Trump administration. 

Trump may prioritise immediate US interests over long-term strategic alliances. Trump has a history of taking a hardline approach to immigration. 

During his first term, Trump introduced restrictions on H-1B visas, making it more difficult for Indian IT professionals to work in the US. 

On the face of it, Trump may be preferred by India, even if that outcome may not be in total favour of India, and the relations will improve or deteriorate from month to month or issue to issue. 

India will seek to work closely with whichever candidate makes it to the White House by being agile and proactive in its engagement with the new administration. Having said this, the election results (in favour of either) could result in a mild rally across the globe, including India, due to the end of uncertainty.

Kunal Mehta, Associate Director, Equirus

Trump’s economic policies seem to be inflationary in nature, with him being adamant about putting tariffs on imports and encouraging companies to manufacture in America. 

Also, tax cuts lead to a higher deficit. From India’s perspective, with further sanctions/tariffs on China, we should be in an advantageous position and improve our trade ties with the USA. 

So, to sum it up, a Trump win might put pressure on interest rates globally and, from India’s perspective, open up more opportunities for Indian companies as a preferred trade partner.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities

The US Presidential elections are bound to create a lot of volatility in the global financial markets, including India. 

However, the markets worldwide will settle soon after the US election. Going ahead from the US election results, other things like geopolitics and global macros like interest rates, earnings growth, and valuations will soon come to the forefront. 

We don’t expect much of an impact on Indian markets due to the US elections aside from the knee-jerk reactions markets might open to after the results are announced.

Arpit Jain, Joint MD, Arihant Capital

The upcoming US elections, with a neck-to-neck contest between Donald Trump and Kamala Harris, are expected to impact global markets, including India, significantly. 

Historically, Trump has taken a protectionist stance, focusing on his “America First” policy, prioritizing boosting US manufacturing and safeguarding domestic interests. 

If Trump wins, we will likely see a continuation of these measures, emphasizing tariffs and policies that protect US industries. 

On the other hand, if Kamala Harris prevails, we may see a shift towards more diplomatic and global engagement, as she is likely to adopt policies that emphasize multilateral relationships and international cooperation. 

However, one key factor remains unchanged regardless of who wins—India’s strategic partnership with the United States. 

Given the current geopolitical climate, marked by China’s assertiveness and Russia’s positioning, the US will continue to value its partnership with India as a key ally in the Indo-Pacific region. 

Over the past few years, India has strengthened its ties with the US, becoming a significant global partner. 

This relationship is expected to endure and evolve regardless of the election outcome. 

While the candidates may differ in their approach, the US-India relationship will likely remain resilient and robust. India plays a critical role in the US’s broader strategic framework.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.