The 60th quadrennial presidential election in the United States, to be held on November 5, is likely to be a closely contested one, as opinion polls predict the Democratic candidate Kamala Harris is likely leading Republican candidate Donald Trump by only a thin margin.
As per the prediction market, Donald Trump has gained momentum during the month of October and is leading by a significant margin, Antique Stock Broking said.
The actual election verdict may be postponed due to delay in processing mail-in-ballots in key swing states like Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, Wisconsin, the brokerage said.
The brokerage expects sectors such as IT, pharma, defence, industrials and oil & gas to see some implications based on who among the two candidates wins the election. Net-net, it sees the Kamala Harris-led Democratic win would be more positive for India.
IT services
Under both parties, Indian IT services companies are expected to see negative impact on margins due to higher onshoring. However, a Democratic win may be more detrimental, as increased US corporate taxes could affect discretionary technology spending. On the other hand, the Republican policy of revoking China's MFN status may lead to increased hiring for Global Capability Centers (GCC) in India, which would be positive for the IT mid-caps, Antique Stock Broking said.
Pharmaceuticals Both the parties intend to reduce prescription drug costs. The Republican Party intends to increase competition in generic business (negative for US generic pharma companies); expand beneficiaries in the Medicare program (positive as it helps increase generic volumes).
Democratic on the other hand are aiming for faster approval for first-time generics (positive for US generic pharma companies).
Oil & gas The Trump administration may be a supporter of traditional oil & gas (higher exploration and drilling and roll back of green energy benefits) as against Kamala Harris's focus on climate and emission. Under Trump, lower oil and gas prices would be negative for upstream and positive for OMCs such as HPCL, BPCL and IOC and city gas distributors such as IGL, MGL and Gujarat Gas.
Under Kamala, more penalties/costs could be loaded on oil and gas producers in the form of carbon credit costs.
Metals The US election outcome is expected to be largely neutral as a tariff hike is already imposed on Chinese steel and aluminum imports and no new policies are likely to be announced by either parties.
Industrials
Donald Trump's focus is to make the USA a global manufacturing superpower, which may be beneficial for MNC industrial companies like ABB, Siemens, Cummins, Honeywell, GE T&D, Hitachi Energy, which are in the process of becoming important partners in the value chain of their parent companies having a dominant presence in the USA, Antique Stock Broking said.
Defence Under the Trump administration, resolution of global conflicts can lead to easing of supply chain for defence companies such as Bharat Dynamics and HAL. Also, the focus on ensuring America's military is the strongest and best-equipped in the world is likely to be a positive for the defence ecosystem in India.
Textiles Under the Trump administration, any imposition of trade barriers with China may benefit Indian textile players as China continues to be the largest exporter of textile products to the US.
Utilities The Democratic Party aspires to invest in climate and energy infrastructure, leading to higher demand for solar module exports. On the other hand, demand for solar module exports may get impacted under the Republican rule due to higher reliance on LNG and withdrawal of IRA's 30 per cent tax credit for for residential solar.