The outcomes of U.S. elections have always been significant for the Indian stock market due to the interconnectedness of global markets. In 2024, the contest between Trump and Harris will be closely watched, particularly as Indian American voters emerge as a crucial demographic. Their preferences could sway election results, reflecting their growing influence in U.S. politics.
Rise of Influence of Indian Diaspora
However, recent volatility in global markets, driven by economic uncertainties and geopolitical tensions, has already affected investor sentiment in India. As Indian equities react to shifts in U.S. policies, particularly in trade and investment, the electoral decisions made by Indian Americans could have profound implications.
Their participation may lead to policies that either support or challenge India’s economic interests, further amplifying the stakes for Indian markets amid a fluctuating global landscape. Possible Impact of Donald Trump’s win on the Indian Markets
Possible Impact of Donald Trump’s win on the Indian Markets:
Positive Outlook for Oil Prices and Geo-Politics
On a more favorable note, Trump’s close relationship with Saudi Arabia and Russia may lead to an increase in global crude oil production and better geopolitical stability. If this occurs, it could push down oil prices, providing a much-needed boost to the Indian economy. As the world’s second-largest importer of crude oil, lower prices would help mitigate inflation and reduce the cost of imports, benefiting consumers and businesses alike in India.
Impact of New Tariffs on Indian Goods
If Donald Trump secures a win in the upcoming elections, he may reintroduce tariffs on Chinese and Indian imports as part of his trade policy. Such tariffs could significantly impact Indian companies that export goods to the U.S., leading to increased costs and reduced competitiveness. This move could result in lower revenues for these firms and trigger volatility in the Indian markets as investors react to heightened trade tensions.
Restrictions on H-1B Visas
Trump’s administration may implement stricter regulations on H-1B visas, which could drastically affect Indian IT companies that rely heavily on this workforce to meet project demands in the U.S. Reduced access to skilled labor could hinder their ability to operate
effectively and compete in a rapidly evolving market, leading to potential job losses in India and impacting overall industry growth.
Possible Impact of Kamala Harris’ win on the Indian Markets:
More Favorable Trade Relations
If Kamala Harris wins the election, her administration may adopt a less aggressive stance toward India and China regarding tariff disputes. This approach could facilitate smoother trade relations, benefiting Indian exporters and reducing market volatility. A more diplomatic trade policy may enhance cooperation between the two nations, potentially leading to increased investment and economic collaboration, and fostering a more stable environment for Indian businesses.
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Supportive Visa Policies for Indian Workers
Harris’s administration is likely to promote a more favorable visa policy for skilled workers, including those from India. This could ease access to H-1B visas, allowing Indian IT and engineering professionals to contribute more effectively to the U.S. economy. Such changes would benefit Indian companies by ensuring a steady flow of talent, enhancing their operational capabilities and competitiveness in the global market.
Economic Challenges from Federal Reserve Policy
Despite these positive developments, there may be concerns regarding economic management under a Harris administration. As the Federal Reserve is less likely to go for aggressive rate cuts to stimulate growth under the Democrat’s rule as the party’s manifesto lies towards bringing down inflation, this could lead the Reserve Bank of India (RBI) to maintain its repo rate for an extended period. This situation would limit the money supply in the Indian economy, potentially stalling expansion cycles and hindering investment in infrastructure and development.
Geopolitical Tensions and Relationships
Kamala Harris may face challenges in handling geopolitical tensions effectively, particularly given the Democrats’ historically complex relationship with Middle Eastern countries. This could result in less favorable outcomes for India in terms of strategic partnerships and energy security. Weaker ties with these nations may hinder India’s ability to navigate regional issues, impacting its foreign policy and overall geopolitical standing.
Conclusion
Future developments in the US election will be fascinating to watch since they will have a big effect on world markets. In addition, as the United States continues to dominate nearly one-fourth of the global GDP, India’s increasing importance would be something to observe as its relations with the incoming US president would play a significant role in the development and expansion of the Indian economy.
Written By: DIpangshu Kundu
Disclaimer
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