Donald Trump's likely win in US Presidential elections and its impact on Indian sectors decoded
As Donald Trump is likely to win the US Presidential election after over 90 per cent of the estimates votes are counted, Indian IT is expected to draw major benefit.
As per reports as Donald Trump is performing better in the historic US Presidential elections, here is Zee Business research take on how Donald Trump's win would impact the different sectors constituting the Indian economy.
Donald Trump government focusses on expansion
As per Zee Business research inputs, the Trump government focuses on expansion and in order to boost manufacturing in the country he may take to tax rate cut.
Furthermore, as has been the case earlier, a slew of tariffs are expected to be levied on China. Previously, also under his leadership, a slew of tariffs were imposed on China as part of his 'America First' policy whereby he intends to lower the country's trade deficit.
IT sector: Higher budget to bode well for Indian IT companies
For promoting manufacturing in the US markets, the tax rate is estimated to be reduced to 15 per cent from 21 per cent. And with the reduced rates in place, the companies will be left with a higher budget and this is expected to bode well for Indian companies facing the wrath of slow spending by US clients.
H-1B visa policy program does not have much impact on Indian IT companies, added the research inputs.
Pharma sector
There is anticipated a change in tariff for Indian generic drug exports.
Auto components, chemical, textile among sectors seen to benefit from big tariffs on China
As per research inputs, in case the US levies huge tariffs on China, Indian sectors that will likely reap the benefit include auto components, chemicals, textiles and consumer electronics.
Commodities and metal sector outlook amid Trump reign
In his previous term, commodity prices saw a spike. Additionally, under his leadership, Indian metal exporters will likely benefit.
Broader markets buzzed
After Trump's victory in 2016, as per ICICI Securities, broader markets outperformed with the Smallcap index zooming as much as 23 per cent over the next six months, followed by Midcap giving 18 per cent return.
However, Nifty during the same time gained 9 per cent. The sectoral gain is given here below:
PSU Banks +23.3%
Energy +21.3%
Power +16.7%
Bank +16.8%
Metal +4.2%
IT +2%
Auto +0.9%
Pharma -6%