US Elections 2024: Why the Indian market is cheering Donald Trump's victory

Even on Tuesday, the market made a sharp comeback and ended higher. Benchmark Sensex recovered its early losses to close higher by 694 points. The NSE Nifty climbed 217.95 points, or 0.91%, to settle at 24,213.30 as 39 of its constituents advanced and 11 declined.

Donald Trump claimed victory in the 2024 presidential contest after Fox News projected that he had defeated Democrat Kamala Harris, which would mark a stunning political comeback four years after he left the White House.

"America has given us an unprecedented and powerful mandate," he said early on Wednesday to a roaring crowd of supporters at the Palm Beach County Convention Center, flanked by his vice presidential running mate, Senator JD Vance, Republican leaders, and members of Trump's family.

Trump has already won the swing states of North Carolina and Georgia in Tuesday's US presidential election, according to Edison Research, taking him closer to completing a stunning political comeback four years after he left the White House.

A candidate needs a total of at least 270 votes in the state-by-state Electoral College to claim the presidency.

Why are Indian markets rising?

There are mixed views on the impact on the Indian economy and markets in case Trump wins. However, the majority believes that the long-term relationship between the US and India is steady and will deepen if Trump comes to power.

Further, analysts note that the strength and robustness of the India-US relations are reflected in the fact that over the last decade or even more, these relations have stood the test of time despite the change of parties and persons at the helm of affairs in the USA.

"Sectors with significant exposure to US policies, viz., IT services and pharmaceuticals, and textile sectors could need a reorientation because of changes in trade policies and healthcare reforms. But the bonhomie and the personal chemistry between the Indian PM and the US President could significantly help to smooth ruffled feathers," said Dr. Manoranjan Sharma, chief economist at Infomerics Ratings. 

IT, pharmaceuticals, and textile sectors, which export significantly to the US, could be dented. Should Donald Trump romp home, India’s domestic growth path could get impetus because of Trump’s focus on keeping oil prices low and stable, Sharma adds.

Besides, Trump promised a host of tax measures that are expected to benefit the US economy overall, in turn giving a fillip to the global economy.

Trump has floated several tax policy ideas, including extending the expiring 2017 Tax Cuts and Jobs Act (TCJA) changes, bringing back the deduction for state and local taxes (SALT), reducing the corporate tax rate for domestic production, exempting various types of income from the income tax, and repealing green energy tax credits.

Another major reason why Trump's win is being celebrated in India is the fact that in September, the Republican presidential candidate said he would end the Russia-Ukraine war if he wins the November presidential elections. 

“I'll get the war with Ukraine and Russia ended. If I'm president-elect, I'll get it done before even becoming president,” Trump, 78, said in response to a question during the debate. Asserting there was no threat of war in the four years he was president from 2017 to 2021, Trump said, "I know (Russian President Vladimir) Putin very well. He would have never -- and there was no threat of it either, by the way, for four years -- gone into Ukraine and killed millions of people when you add it up...," Trump had said.

An end to the war is the biggest positive for the markets across the globe, including India. Hence, the cheer.