Starting this thread to analyze the impact USA Policy changes have on Indian Economy and Equities. Though it’s no use trying to predict winner of an Election, or speculating the policies they might bring, once the event happens, we can be better prepared if we analyze it.
Historically, market sentiment goes bearish if there’s a regime change, and then gradually recovers. This is because market loves continuity of policies and fears uncertainty - which is often temporary.
IT & Pharma:
- They are export heave sectors in India, are most impacted by election outcomes.
- Trump favours a 20% tariff on all imports from outside USA, and 60% for goods from China.
- Trump has also criticized India’s import tariffs, and had vowed to have reciprocal taxes in place.
Renewable Energy:
- Trump is looking at more production of Energy from Oil & Gas, and aims to make Energy utilities cheaper for the people.
- Many Indian companies are top exporters of Solar PV to USA, and could see poor order growth.
- Though older policies will remain in place.
Geopolitical Stability:
- Geopolitical conflicts have been lower during a Trump presidency.
- This impacts global equities.
Weaker US dollar:
- Donald Trump believes that devaluing the dollar will restore America’s manufacturing sector to its former glory.
- A weaker dollar support’s Indian equities+debt market. FII would be more comfortable holding Indian companies if INR depreciation is low.
- Imports may become cheaper for Indian companies for raw materials, boosting profit margins.
- Indian debt markets high interest rates become attractive given less deprecation of the rupee. Else there’s no use getting 7% yield in India when the INR weakens by 10% every two years.
I plan to continue adding to this thread based on what unfolds. Appreciate any insights from the VP community!
