Donald Trump’s possible return to the US presidency could positively impact Indian sectors such as automotive, energy and metals, with a largely neutral outlook expected for the pharmaceutical industry, as per Business Standard.

The US, which accounts for roughly 18% of India’s merchandise exports, is a major market for Indian goods, particularly electronics, gemstones, pharmaceuticals, nuclear reactors, and petroleum products. Additional, though smaller, exports include iron, steel, automobiles, and textiles.

India also stands out as a significant exporter of services to the US, especially in IT and professional services. Both the Trump and Biden administrations have seen notable rallies in US and Indian equity markets. During Trump’s first term, the S&P 500 and NASDAQ grew by 70.2% and 142.9%, respectively, while under Biden, they rose by 50.8% and 36.8%. In India, the Sensex and Nifty gained 82.3% and 73.6% under Trump and continued their upward trend with gains of 59% and 64.5% during Biden’s administration, according to Business Standard, citing Bloomberg data.

In a recent note, Phillip Capital analysts Anjali Verma and Navaneeth Vijayan suggested that a potential presidency under Kamala Harris would bring continuity to the economy and asset markets, Business Standard said. However, they noted that Trump’s policies could significantly affect emerging markets, especially equities and currency, due to his stance on de-globalisation, potentially benefiting India in the long run.

According to HSBC, a Democratic clean sweep could bring about corporate tax hikes and stricter antitrust laws, which might put pressure on US equities. Additionally, uncertainty regarding big tech and AI regulations could impact market sentiment. Alastair Pinder, HSBC’s head EM and Global Equity Strategist, mentioned that a divided Congress could increase uncertainty around tax policies. A Trump victory with a split Congress could lead to heightened trade tensions, potentially affecting global equities.

Emkay Global, a Mumbai-based brokerage, pointed out that a Harris presidency would likely follow Biden’s strategic approach towards India, though specific issues, such as recent Khalistani tensions, might require immediate attention, according to a Business Today report. Conversely, a Trump presidency could introduce tariff challenges for India as part of a domestic focus, primarily directed at China, but likely affecting Indian trade as well.

Despite potential short-term fluctuations in the Indian stock markets due to the US election results, the medium- to long-term trajectory of Indian equities is expected to depend primarily on domestic factors. Regulatory policies, inflation, interest rates, economic growth, and corporate earnings are likely to be the core drivers. Local investors have also played a substantial role in the recent rise of Indian stocks, and their future behaviour will be essential in shaping market trends.

On the international front, much will depend on the US Federal Reserve’s decisions regarding interest rates, which will influence global capital flows and investment sentiment.