Trump vs. Harris: Indian stock market reacts across 8 sectors

With the U.S. presidential election approaching on November 5, the Indian stock market is bracing for potential shifts depending on whether Republican Donald Trump or Democrat Kamala Harris wins. Analysts predict that the outcome will impact key sectors in India, especially export-oriented ones like IT, pharmaceuticals, and textiles, with potential ripple effects on metals, oil & gas, industrials, defense, and utilities.

Market Predictions for a Trump Win

If Trump wins, analysts expect potential short-term boosts in the stock market despite uncertainties over tariffs. Ashika Stock Broking suggests Trump’s policies might favor U.S. growth, boosting the dollar and strengthening the U.S. equity market relative to the rest of the world. The victory could see tariffs reintroduced, pressuring the global economy but possibly benefiting specific sectors domestically.

Emkay Global adds that a Trump win could lead to a temporary market rally, though long-term effects would depend on corporate earnings. A "Red Sweep" by Republicans might drive initial euphoria in stock markets, but its sustainability hinges on earnings momentum and valuations.

Market Predictions for a Harris Win

On the other hand, a Harris victory could introduce changes in U.S. fiscal policy, which might slow down growth rates, bringing a more globalized economic approach. While Emkay Global expects a Democratic win to create an initial correction in Indian markets, they anticipate only minor long-term impacts on the Indian economy.

Ashika Stock Broking believes Harris’s win could stabilize global markets, decreasing reliance on the U.S. dollar and favoring more international equity performance. A more moderate impact on Brent crude prices and metals is also expected under Harris's leadership.

Tight Polls in Swing States

The election hinges on a few swing states, particularly Pennsylvania, which analysts view as a critical pathway to victory for either candidate. With polling margins razor-thin in several states, Nomura India warns that polling errors in swing states could lead to unpredictable outcomes, highlighting how tightly contested this election is.

Sectoral Impacts

1. IT Services
   A Republican administration may benefit India’s IT sector by shifting jobs from China to India, while higher onshoring in the U.S. could pressure margins. However, a Democratic administration might be less favorable, as Harris's tax proposals could curtail tech spending, affecting IT exporters.

2. Pharmaceuticals
   Both Trump and Harris aim to reduce U.S. drug prices, but their methods differ. Trump’s focus on boosting competition in generics could pressure margins for U.S. generic producers, benefiting large players in India. Harris’s emphasis on swift approvals for new generics could further boost Indian pharma companies that cater to the U.S. market.

3. Industrials
   Trump’s "America First" manufacturing agenda would benefit Indian multinationals tied to the U.S. supply chain, such as ABB, Siemens, and Honeywell. These companies, heavily linked to U.S. operations, could thrive under a Trump presidency focused on strengthening U.S. manufacturing dominance.

4. Oil & Gas
   Trump’s backing of traditional oil and gas would benefit Indian oil companies reliant on lower crude prices. In contrast, Harris’s push for green energy could increase carbon credit costs, impacting Indian producers who export to the U.S. or rely on fossil fuels.

5. Defense
   Trump’s commitment to U.S. military dominance might strengthen ties with Indian defense companies like Bharat Dynamics and HAL, which benefit from international collaborations and eased supply chains. Harris’s foreign policy could be less defense-focused, potentially impacting India’s defense exports.

6. Metals
   Given existing tariffs on Chinese metals, the sector is unlikely to see major policy shifts under either candidate. However, increased global growth from Harris’s policies could raise demand for metals, benefiting Indian exporters.

7. Textiles
   A Trump win could lead to trade barriers against China, potentially benefiting Indian textile exporters as U.S. buyers seek alternative suppliers. This would provide a direct boost to India’s textile sector, which is currently the second-largest exporter to the U.S. after China.

8. Utilities
   Harris’s focus on climate infrastructure would drive demand for Indian solar modules, while Trump’s support for LNG could hinder renewable energy exports to the U.S., especially if he rolls back residential solar tax credits.