|
As the US presidential race between Democrat Kamala Harris and Republican Donald Trump intensifies, the sectors of the Indian economy are set to see the economic ripple effect from the election results due to the policy differences between the two, an analysis by JM Financial Institutional Securities highlighted.
The policy differences on trade, interest rates, immigration, and healthcare and the election outcome could shape India's banking, IT, pharmaceuticals, auto ancillaries, energy, real estate, and other sectors, as analysed by the firm. The analysis says that Harris' win will come with a more accommodating stance by the U.S. Federal Reserve, and it will push the Reserve Bank of India (RBI) to ease rates domestically. This will benefit Indian non-banking financial companies (NBFCs), as falling interest rates could reduce funding costs and stimulate loan demand. Contrary to it, Trump's win could keep interest rates elevated in the U.S., which will pressure the RBI to maintain higher rates, delay the rate cut and slightly favour public sector banks (PSBs) over NBFCs. The Kamala Harris win will be favourable for the life insurers in India as the Democrat sides with the rate cut decision. "A Republican outcome could be negative at the margin for insurance companies," the report says. The Indian Information Technology (IT) sector, which has been a major beneficiary of US demand, is expecting a Republican win, given former President Trump's restrictive stance on the H-1B visa program, as per the report. If the Republicans secure a win, Indian IT firms may experience added cost pressures but are unlikely to see operational disruptions. Indian pharmaceutical sector will be largely unaffected despite the Biden administration's policy to permit Medicare to negotiate drug prices, set to commence in 2026. Republicans could potentially repeal or limit these negotiations, altering market dynamics but having minimal impact on India's pharmaceutical exports. The report says that if Republicans win, it will accelerate tariffs on Chinese imports, reinforcing the "China+1" strategy and opening new export avenues for Indian auto component manufacturers. This will increase India's share in global supply chains, though higher tariffs might require Indian manufacturers to increase their presence in the U.S., the report anticipated. A Republican administration led by Trump will endorse policies supportive of US shale production, possibly lowering global oil prices. This move will impact India's energy import bill. His pro-oil stance, combined with attempts to ease geopolitical tensions, may reduce oil's risk premium, which could be a net positive for India's import-dependent energy sector. The interest rate stability under Trump could curb near-term demand in India's real estate market, especially in affordable housing. Additionally, Trump's "America First" policy could restrict IT hiring, impacting the occupancy rates of Indian office spaces. Flex office operators and commercial real estate stakeholders would therefore keep a close watch on any policy shifts that could deter offshore business growth, as per the report. Trump's victory in the US election might influence commodity prices, given past tariff policies that disrupted global trade flows. Higher tariffs on Chinese metals could prompt Indian metal exporters to benefit, though price instability could affect long-term profitability, the report added. Interestingly, the report adds that Trump's stance on China is expected to further open up the U.S. market for Indian chemical exports. It will potentially offset the tariffs India faces, benefiting the country, the report mentions. The textile and tile sectors, especially the Morbi ceramic industry, could see increased demand under a Trump administration as tariffs on Chinese goods push U.S. buyers to seek alternatives. It further added that Trump's victory will potentially benefit India's wire and cable industry, with possible enhanced demand from the U.S. due to the restricted imports from China. (ANI)
|
