With Donald Trump confirmed as the winner of the US presidential election 2024, a shift in US policies and foreign relations might have an impact across multiple sectors of the Indian economy. His administration’s approach to trade, immigration, and foreign affairs may provide opportunities for some companies while creating obstacles for others. Let’s look at how important Indian market sectors may react to these projected changes:
Sectors To Get Benefits in India
1. Energy Sector
Global petroleum prices are predicted to decline as a result of an increase in U.S. production of natural gas and crude oil, which is fueled by President Trump’s calls for high levels of fossil fuel production. By lowering import prices, this tendency may help Indian refiners and consumers. Securing long-term contracts from the US might also help Indian gas utilities, supporting India’s objective of increasing the proportion of natural gas in its energy mix.
2. Defense Sector
India’s strategic goals align with President Trump’s focus on the Indo-Pacific area. Prominent Indian defense firms like Bharat Electronics and Hindustan Aeronautics Ltd. stand to gain from stronger Indo-US defense collaboration. Due to improved defense ties, these stocks can be attractive investment prospects.
3. Metals and Commodities Sector
The border wall and domestic industry safeguards are two examples of Trump’s infrastructure investment promises that could increase demand for metals in the United States. Increased export prospects should benefit Indian metals firms like Tata Steel and Hindalco due to higher global prices.
4. Textiles and Electronics Sector
India may emerge as a preferred alternative supplier if Trump raises U.S. taxes on Chinese imports. If American businesses look for alternatives to China, this change may open doors for Indian textile and electronics firms like Dixon Technologies and Arvind Ltd., which may witness an increase in shipments to the United States.
Sectors That Might Face Challenges in India
1. IT and Software Services
Trump’s immigration policies, especially those pertaining to H-1B visas, could put pressure on India’s IT industry. As they are compelled to recruit locally in the United States, companies like TCS, Infosys, and Wipro could experience an increase in operating costs, which might pressure their profit margins as they adjust to this new environment.
2. Automobile Sector (EV Segment)
The United States may see a slowdown in EV adoption as a result of Trump’s preference for conventional auto manufacturing and his proposal to cut EV subsidies. For Indian auto component producers like Sona BLW and Samvardhana Motherson which heavily rely on EV demand, this could pose short-term challenges. The market for hybrid cars, however, could potentially make up for some of these difficulties.
3. Pharmaceuticals
Indian pharmaceutical companies that export generics may continue to face pricing pressure as a result of Trump’s continuous efforts to lower prescription prices in the United States. Despite this, companies like Sun Pharma and Dr. Reddy’s Laboratories are likely to continue to export in consistent amounts, which will help them stay afloat in the American market.
Stock-Specific Impacts
- Bharat Forge and RK Forging: With infrastructure projects on the horizon in the U.S., these companies could see heightened demand for Class 8 trucks, driven by Trump’s spending plans.
- ONGC and Reliance Industries: Lower global crude prices resulting from more U.S. production should help both companies, which may see their profitability improved.
- Dixon Technologies and Arvind Ltd.: These companies are positioned to gain as India becomes a more appealing source for American companies since taxes on Chinese imports predicted to climb will help them.
It is visible that Indian businesses will have chances as well as difficulties if Trump’s initiatives change the global economy. To carefully negotiate this shifting terrain, Investors, policymakers, and industry leaders all should keep tuned to these events. The analysis is based on a report by PhillipCapital India Research, which examines the potential impacts of the 2024 U.S. presidential election on India’s economy and key sectors.
