US presidential election 2024: Indian markets react to Trump victory

Investors are bracing for shifts in US foreign policy, trade dynamics, and economic strategy, all of which are likely to impact India’s trade, technology, and currency sectors.

On Wednesday (Nov. 6), the BSE Sensex and the NSE Nifty opened with sharp swings as market participants gauged the potential for policy changes under Trump’s renewed “America First” approach.

After an initial dip, both indices stabilized, reflecting investor caution but also optimism for certain sectors, including energy and technology, which could benefit from shifts in US trade and energy policy.

At mid-day trading, the Sensex was up slightly by 0.4 percent, while the Nifty recorded a similar increase.

The Indian rupee faced immediate pressure against the US dollar, with the exchange rate hitting a one-month low.

The dollar's rise, fueled by investor confidence in Trump's fiscal policies and expectations of potential Federal Reserve rate hikes, put emerging market currencies on the back foot.

A stronger dollar could increase India’s import bill, particularly for oil, while impacting sectors with dollar-denominated debt, such as infrastructure and aviation.

India’s IT and pharmaceutical sectors are watching closely, as Trump's policies could both help and hinder business in these sectors.

During his previous term, Trump pushed for tighter immigration policies, particularly impacting the H-1B visa programme, which is heavily used by Indian IT companies.

Renewed restrictions could affect IT companies’ ability to service their US clients on-site.

However, increased US spending could boost demand for offshoring and technology outsourcing, which could work in India's favour.

Pharmaceuticals also face uncertainty.

While Trump's stance on reducing drug prices could pressure margins for Indian pharma companies exporting to the US, it may also open doors for cost-effective generic manufacturers, allowing India to position itself as a lower-cost alternative for the US healthcare market.

Trump’s favourable stance on domestic energy production and fossil fuels is seen as a positive for India’s oil and gas sector.

Rising US production under Trump could stabilize global oil prices, potentially benefiting India's oil importers by moderating price spikes.

Stocks of Indian oil and energy companies like ONGC and Reliance Industries rose modestly as investors anticipated less volatility in global crude oil prices.

India’s export sector, particularly in textiles and automotive parts, is bracing for possible trade policy shifts under Trump.

His past emphasis on tariffs and domestic manufacturing has raised concerns of potential barriers for Indian exports to the US Some analysts caution that Trump’s protectionist approach could impact India’s trade volume, while others argue that India’s diversified export base and growing ties with Europe and Southeast Asia might mitigate some risks.

Overall, Indian markets are reflecting a mix of caution and strategic optimism as Trump's victory unfolds.

While there is concern over potential restrictions and policy shifts, the market's reaction shows resilience, with investors hopeful about sectors poised to benefit.

Indian exporters and businesses with a US footprint are likely to monitor developments closely, adjusting strategies to navigate the changing dynamics under Trump’s leadership, according to analysts.