Donald Trump wins US elections: What it means for Indian stock market, economy

With Donald Trump back in power, India's economy and stock market could see significant shifts. Find out which sectors to watch and where to invest as global trends evolve.

In Short

• Sensex, Nifty surge as Trump secures path to US presidency
• Market surge reflects investor optimism after Trump’s election victory
• IT sector, banking, and manufacturing could benefit from Trump’s policies

Indian stock markets rallied as Donald Trump secured his path to become the 47th US President.

The S&P BSE Sensex gained 900.50 points, closing at 80,378.13, while the Nifty50 rose 270.75 points to 24,484.05. These figures reflect a single trading session, but the broader implications of Trump’s victory for India’s economy and financial markets could be far-reaching.

The market movement shows a clear shift in investor sentiment.

Vinod Nair from Geojit Financial Services said, “The global markets experienced a relief rally following the US election results, reducing political uncertainty with Trump securing a strong mandate. This has led to strong risk-on sentiments, driven by expectations of tax cuts and increased government spending.”

Ajay Garg, Director and CEO of SMC Global Securities Limited, provided a comprehensive outlook. He said, “Trump’s second time after a gap of four years as US President is expected to bring both opportunities and challenges for India across trade, defense, immigration, and technology.”

Garg highlighted that while protectionist trade policies could impact Indian exports, Trump’s strategy to reduce US dependence on China may create new opportunities for Indian manufacturers and tech firms as alternative suppliers.

IT, DEFENSE AND CRYPTO BOOST

Raj Patel, CMO of MintCFD, shared insights into specific sectors that may gain from Trump’s victory. “The defense sector, driven by Trump’s focus on military strength, is expected to see increased demand, with greater government spending on defense initiatives,” Patel noted.

He added that Trump’s push for US energy independence could favour fossil fuel companies, creating a more favourable environment through deregulation in energy production.

Patel also highlighted potential benefits for large financial institutions through banking deregulation, potentially leading to higher profits and more lending activity.

In the digital asset space, Patel said, “Cryptocurrencies may see a boom under a second Trump term, given his pro-crypto approach. A more favorable regulatory environment for digital assets like Bitcoin and Ethereum could enhance their value.”

Meanwhile, Edul Patel CEO and Co-founder Mudrex, said, "With this win, the crypto markets are likely to see a range of deregulations in the crypto space starting 2025, leading to higher adoption rate."

"If Trump follows through on promises like establishing a national Bitcoin reserve and forming a Crypto Advisory Council, the US could become a global leader in mainstreaming digital assets. His pro-crypto stance will also influence other countries including India to have a clearer framework for digital assets," he added.

The US-India relationship may see developments in line with Trump’s foreign policy. As Garg pointed out, “A continuation of his first-term approach, including strengthening US-India ties through initiatives like the Quad, would enhance security cooperation, benefiting India.”

He added that Trump’s focus on revitalising US manufacturing could encourage global companies to set up production in India.

Swapnil Aggarwal, Director, VSRK Capital, highlighted that Donald Trump’s re-election could introduce notable shifts for the Indian market, with sectors like manufacturing, energy, and defense standing to benefit and presenting new opportunities for investors.

"Should Trump reimplement high tariffs on Chinese products, Indian manufacturers could gain a competitive edge in US markets, boosting export-oriented industries such as auto parts, solar equipment, and chemicals. This could have a positive impact on mutual funds that invest in these sectors, making them attractive options for investors aiming to leverage India’s expanding export potential," Aggarwal added.

"A Trump-led administration could also see lower energy costs due to pro-fossil fuel policies, benefiting Indian oil and gas companies," he noted.

WHERE TO INVEST?

Understanding sector-specific opportunities will be key for investors on Dalal Street. The IT sector shows promise, with Nair noting that “BFSI spending in the US has improved as per the IT Q2 result, which is positive for Indian players.”

Companies in defense, traditional energy, and manufacturing could benefit from Trump’s policies, while the financial sector might see growth through deregulation.

Garg added that Trump’s proposal to reduce the corporate tax rate for domestic production from 21% to 15% could support IT services demand by alleviating budgetary constraints for US firms, benefiting companies like TCS and HCL Technologies.

He also noted that Trump’s reduced emphasis on climate action may lessen US support for India’s renewable energy sector, which could be favourable for companies like NTPC and SJVN. Moreover, his pro-business stance could encourage investment in strategic technologies like 5G, benefiting Indian telecom giants such as Reliance Industries and Bharti Airtel.

AMERICA FIRST, H-1B VISA RULES AMONG KEY CONCERNS

On the other hand, Palka Arora Chopra, Director at Master Capital Services, shared a contradictory view. She highlighted that the Indian stock market could facevolatility due to Donald Trump's "protectionist trade policies and more restrictive immigration plans".

"His America First & Make America Great Again agendas, which emphasises tighter immigration controls, may pose challenges for India’s IT sector, which relies heavily on US H-1B visas to deploy talent onshore. If Trump further limits these visas, Indian IT firms may potentially experience headwinds like increased costs and operational challenges, affecting their US growth prospects," said Chopra, adding that the pharma sector could face a similar scenario.

She further highlighted that commodity prices rose because of Trump's protectionist trade polices and this could make foreign institutional investors cautious and limit investments in emerging economies like India.

"Overall, Trump's policies may create headwinds for sectors like IT and Pharma in the near-term but may be beneficial in the longer term, as a stronger dollar will result in better revenues for Indian IT firms, which are heavily reliant on this geography for their earnings, which are reported in US Dollar terms," Chopra said.

Therefore, for Indian investors, this means carefully weighing sector-specific opportunities against potential trade and policy headwinds while keeping a long-term perspective on their investments.

WHAT ABOUT GLOBAL MARKETS?

Ross Maxwell from VT Markets offers a global perspective: “Markets have responded positively, with indices rising and the USD strengthening, largely due to Trump’s previous term, which saw tax cuts and deregulation benefiting sectors like manufacturing, energy, and defense.”

However, Maxwell cautioned that Trump’s protectionist stance could have broad effects, particularly on emerging markets reliant on US trade.

He summed up the outlook, saying, “While Trump’s policies present both risks and opportunities, they are likely to create a cautious outlook for the global economy.”

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)