Donald Trump vs Kamala Harris: Here's what US elections could mean for Indian stock market

Indian benchmark indices were reeling under severe pressure on Monday with benchmarks including Sensex and Nifty tumbling nearly 1.5 per cent each, falling to their multi-month low amid the sharp sell-off by the overseas investors and rising uncertainty over the upcoming US elections.

Nifty50 dropped nearly 490 points to 23,816, slipping below 23,900-mark for the first time after June 28, 2024. Sensex was also down nearly 1,500 points to test lows at 78,232.60 for the day. Broader markets were not spared either as BSE midcap and smallcap indices crashed nearly 2 per cent each.

Republican presidential candidate Donald Trump was neck-to-neck with Democrat Kamala Harris in the presidential race. Elections in the US will be held on November 5. Besides the US elections, geopolitical concerns, crude oil prices and selling pressure by the FIIs is also denting the sentiments of Dalal Street.

Data showed FPI sold local shares worth Rs 1.14 lakh crore in October 2025, which is the single highest absolute selling ever in a month by FPIs. This relentless selling contributed hugely to the about 8 per cent decline in benchmark indices from the peak. A flop shows by India Inc in September 2024 quarter also soured the sentiments.

There is no clear correlation between the party in power and performance of indices during the party’s tenure. Market returns are dependent more on the state of the economy and the policies of the party in power, said JM Financial. "Hence, it is critical to understand what each candidate or party stands for to figure out the impact on various sectors," it said.

Nifty and Sensex have resumed their downward trend after a week of consolidation, largely due to heavy selling by FIIs, said Santosh Meena, Head of Research at Swastika Investmart. "The expectation of another stimulus package from China is driving fund outflows from India to China, while FIIs are also booking profits ahead of the significant upcoming US elections," he said.

Both Nifty and Sensex are approaching their 200-DMAs, around 23,500 and 77,000, respectively, where a temporary bottom may form. Bank Nifty is showing relative resilience, supported by attractive valuations, Meena added. "Amid the current market pullback, investors are encouraged to focus on stocks with reasonable valuations and strong earnings momentum."

The corporate earnings scorecard for Q2FY25 has been weak but excluding commodities, it’s broadly in-line. The earnings spread has deteriorated, with only 62 per cent of our coverage Universe either meeting or exceeding profit expectations. Consumption has emerged as a weak spot while select segments of BFSI are seeing asset-quality stress, said Motilal Oswal.

"Our model portfolio reflects our conviction in domestic structural as well as cyclical themes. We are ' overweight' on IT, healthcare, BFSI, consumer discretionary, industrials and real estate. In contrast, we are 'underweight' on metals, energy, and automobiles," it added.

A Democratic sweep could trigger a fresh wave of selling and a significant correction, which should be bought into - the impact on the Indian economy and markets is marginal. The medium-term play for India may not differ in either Democrat or Republican regime, said Emkay Global Financial Services.

"We believe as the world navigates the imminent period of higher growth and inflation variability in the world, and probably redefine the conventional investing playbook, the India investing strategy may be no different, even as she enjoys some structural growth levers versus EM peers," Emkay added.
 

Seasonality-wise, in the current week, the Nifty has averaged a gain of 0.5 per cent, having risen 60 per cent of the time, based on decade-long data, said Akshay Chinchalkar, Head of Research at Axis Securities. "Looking at the US presidential years since 1999, the Nifty has generated a median return of 1.3 per cent, rising in 5 out of 6 between the period covering one day before election day and two days after."