Donald Trump, the Republican party candidate, has won the US Elections 2024 with a thumping victory and is set to become the 47th president of the United States. While a number of brokerage firms and market pundits have given Trump's victory a major thumbs up, select analysts see several risks and contradictions for India.
Kotak Institutional Equities notes several contradictions in the Trump trade including corporate tax cuts in the US may result in higher earnings and spending on IT services but will also result in higher fiscal deficits (if unfunded) and US dollar weakness in the medium term. Higher import tariffs will result in higher inflation and interest rates and lower growth in the US, it said.
Kotak added that the ‘America First’ policy may limit outsourcing and impose fresh restrictions on visas and an anti-ESG approach may not be positive for a portion of India’s exports such as solar PV modules, and more. "EMs are even less likely to find favor with asset allocators. FPI outflows from India may accelerate in the near term, given the dominance of passive inflows in FPI flows," it said.
Indian stock markets had cheered Trump's triumph in the trading session on Wednesday, with benchmark indices posting big gains. However, bears countered attacked on Thursday with Sensex and Nifty taking a beating and dropped up to one per cent in the early trade. Trump's victory means fewer Fed cuts, with expectations of one more cut next year.
At the outset, while India will also face the brunt of higher tariffs, immigration restrictions, and Trump’s unconventional thinking, said Phillip Capital. "In the medium-long term, we retain our expectation that the political, economic, and industrial impact should be positive as compared to the Harris regime," it said.
India should be the beneficiary of highest ever tariffs on China; China+1 strategy to receive one of the best passive pushes for India assuming Indian government and corporates take timely advantage of the space forcibly vacated by China, said the brokerage. "There will be inflationary pressures, uncertainty on fed policy, and massive economic/industrial readjustment."
Indian benchmark index Nifty has fallen 8 per cent from its recent highs owing to massive FII outflows, valuation risks and concerns on growth slowdown. Broader markets, including smallcaps and midcaps, have also faced similar pain with select stocks falling up 30 per cent from their highs.
Antique Stock Broking believes that the new US administration will continue to favor India in order to counter-balance China, accelerate the China + 1 theme, and help lower crude oil prices through increased non-OPEC supply.
"We remain overweight on industrial, consumer discretionary (like real estate, retail, hotel, textiles), and power utilities. Our September 2025 Nifty50 target stands unchanged at 26,500 based on 20x 1HFY27 EPS of Rs 1,300," it said.
Phillip Capital has picked a host of stocks which it liked after recent correction. These select picks included ICICI Bank, Axis Bank, HDFC Bank, SBI, Muthoot Finance, Shriram Finance, Bajaj Housing Finance, Infosys, LTI Mindtree, Coforge, L&T, Siemens, Cummins, BEL, Data patterns, HAL, NMDC, Nalco, SAIL, Ultratech, JK Cement, Ambuja, Sun Pharma, Aurobindo, Dr Reddys, Aarti, Atul and SRF.
It has also picked Divis Labs, Syngene, Suven, Ami Organics, MTAR Tech, Cyient DLM, Amber, Waaree Energies, TVS Motors, Maruti, Bharat Forge, Hero MotoCorp, Go Fashion, V-mart, Shopper Stop Marico, Godrej Consumer, PFC, KDDL, Indocount, GAIL, IGL, Paradeep Phosphate and Sumitomo Chemicals.