As the United States gears up for its 2024 presidential election, global markets including India’s equity market, are closely watching the developments across the Atlantic. Donald Trump and Kamala Harris, are both campaigning heavily for the scheduled November 5, 2024 Presidential election voting. The US elections not only shape domestic policies but also have far-reaching implications for international economies, mainly emerging markets like India.
The counting of the votes will commence on November 5, which happens to be the vote-casting day. The announcement of the winner happens on the same night or or next day. The winner of the US Presidential election will serve for 4 years.
In this blog, let us explore the probable impact of US elections on the Global and Indian markets.
Historically, US elections have impacted global market sentiment significantly. A change in administration can lead to shifts in foreign policy, trade relations, and economic strategies. The upcoming election in 2024 is no different, with potential outcomes that could either stabilise or destabilise market conditions worldwide. For example, a victory for a candidate perceived as pro-business could strengthen investor confidence, leading to increased capital flows into emerging markets, including India. Conversely, an election outcome that raises concerns about protectionist policies could deteriorate investment and create volatility.
India’s economy is intricately linked to the US, the world’s largest economy. The election outcome could result in changes to trade agreements, tariffs, and regulations that affect bilateral trade.
Foreign Institutional Investors (FIIs) play a crucial role in the Indian equity market. Their investment decisions are heavily influenced by global economic conditions, which can be swayed by the US political climate. If the election results in a stable government that fosters a positive economic outlook, FIIs may be more inclined to increase their investments in India. This influx of capital can bolster the Indian stock market, driving up indices and enhancing liquidity.
The US election outcome can also affect currency valuations, particularly the Indian Rupee. A strong dollar often leads to a weaker rupee, impacting the cost of imports and foreign debt repayments for Indian companies. Currency volatility can also deter foreign investment. Investors will be monitoring the election closely, as shifts in currency values can have immediate effects on market performance and investor sentiment.
Certain sectors in India could experience more pronounced effects based on the election results. For example, the technology and manufacturing sectors might thrive if US policies favour outsourcing and global supply chains.
As we approach the US Elections 2024, the potential implications for the Indian equity market are multifaceted and significant. Investors must remain vigilant, analysing how the electoral outcomes could influence global economic conditions, trade relations, and capital flows.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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