“President Donald Trump’s US election win is positive for India, whereas Trump’s America First approach means a more bilateral rather than a multilateral approach to foreign policy. In Asia, he is likely to maintain a hawkish stance towards China. Countries will be pressed to take sides, increasing polarization risks. If overall sentiments are to be accounted for, majority believe Trump 2.0 will be impacting negatively across Asia. however for India; despite short term disruptions, offset by the medium- term benefit to India from supply chain relocation, as de-risking from China strategy gains further momentum under Trump 2.0
Impact on interest rates: FED would continue to follow its Policy which is in census with US Govt, although many believe with Trump 2.0 Interest rates would be lower. I expects a rise in US bond yields, which may affect the US Federal Reserve’s plan to cut interest rates.
US and Indian markets gained: Wider belief that Trump, given his anti-China and pro-Russia stance, may be more favourable toward India than Kamala Harris might have been. However, potential issues remain, particularly concerning trade and tariffs. In a broader term India stands to gain particularly in Initiative on Critical and Emerging Technology (iCET), GE-HAL Engine deal, De-risking of Supply chain from China.
INR has hit an all-time low: US election results is likely to cause a short-term volatility in the markets both secondary markets as we have seen and similarly in Forex. Gradually as the volatility subsides, market will come to its senses and then further USD-INR impact can be assessed. Broader term INR seems to be heading to further lows in short to midterm, further weakness can continue if Tariffs are reciprocated under Trump 2.0
Fund flows: Trump win may likely to re-energise the dollar and renew investor interest in US assets which may, in turn, accelerate foreign portfolio outflows from India to an extent. But this view may not be true as India becomes more strategic partner to counter china via Quad, I believe India will receive more FDI in areas if manufacturing, Technology in defence and more of Global capability centres. It would look like more of FDI vs FII in Medium term.”
