NEW DELHI: The stage is set for a thrilling showdown in the 2024 US presidential election. Donald Trump , the fiery Republican frontrunner and former president, is gearing up to take on Vice-President Kamala Harris , who has emerged as the Democratic champion after President Biden's withdrawal. With just weeks to go until November 5, the air is electric with anticipation as both candidates unleash their strategies in a neck-and-neck battle that promises to redefine American politics.
The world is keenly watching the tight US race to the White House as the final outcome holds significant global importance. In India also, the potential consequences of a Republican or Democratic administration is being debated with great interest and anticipation by the investors, which are strategically adjusting their portfolios.
In the past, US elections have had a mixed influence on Indian markets, with uncertainty surrounding the next US President affecting market sentiments. However, it is important to recognize that the effects of US elections on Indian markets are typically short-lived, and over the long term, the market's structural trends become the dominant factors in determining its direction.
The economic collaboration between the two countries spans various sectors, including trade and investment, defense and security, education, science and technology, pharmaceuticals and biotechnology, civil nuclear energy, environment, clean energy, space technology and applications, health, and research & development.
The United States ranks as the third-largest contributor of Foreign Direct Investment (FDI) to India, at $49.56 billion in 2023, following Mauritius and Singapore. The cumulative FDI inflows from the US amounted to $65.19 billion from April 2000 to March 2024.
Washington DC is also an important trade partner, with total trade amounting to $128,782 million in 2023, which includes $ 78,542 million of exports and $50,240 million of imports. Meanwhile, the total trade between the two nations has crossed over $118 billion.
Additionally, Indians are the highest recipients of H1-B visas and in 2023 they received 72.3% of all the H-1B visas issued by the US for the fiscal year 2023, according to the data released by the US Citizenship and Immigration Services (USCIS). Also, IT giant Infosys received the highest approval of H1B visas for its employees along with other companies such as TCS, Tech Mahindra and Wipro.
Historical trend
2008: Obama vs McCain
The 2008 US Presidential election which saw Barack Obama emerge victorious on November 04, had indirect effects on global markets, including India but the Indian markets were primarily affected by the 2008 global financial crisis during that year.
The BSE Sensex plunged 10, 537 points from 20, 325 in January to 9,788.06 in October end primarily because foreign investors pulled out funds amid the crisis.The benchmark index further declined to 9,647.31 by the end of the year.
Foreign Portfolio Investors were net sellers in 2008 offloading equities worth Rs 41216 crore from the Indian market as a result of global risk aversion.
While the US election result itself did not immediately reverse this trend, Obama's promise of significant fiscal stimulus and reforms in financial regulations helped stabilise market sentiment in the months following the election. The Indian markets saw a period of recovery starting in 2009.
2012: Obama vs Romney
The BSE Sensex was at 15,534.67 points at the beginning of the year and was at 18,487.90 in the beginning of November. Following President Barack Obama's re-election for a second term, the Sensex fell by 1% in the week following the election, however it managed to record a gain of 3.5% in December, largely due to foreign investor buying.
Foreign Portfolio Investors were net buyers in 2012 infusing Rs 1,63,342 crore in the Indian market.
On the day before the election, the Rupee depreciated by 1.5% to 54.6075 per dollar, the largest single-day drop since October 8th, 2012, which led to an increase in the import bill and inflationary pressures.
2016: Donald Trump vs Hillary Clinton
In 2016, when Republican nominee Donald Trump faced off against Democrat Hillary Clinton, polls indicated that Hillary Clinton was ahead of Donald Trump. This boosted the confidence of investors worldwide, and Indian stocks consistently gained in the days leading up to the election.
The BSE Sensex was at 26,101.50 points at the beginning of the year and was at 27,966.18 in the beginning of November.
However, later the BSE Sensex not only fell 1.75 percent in the month prior to the election but also continued to decline by another 3.25 percent in the aftermath. However, that was not the primary reason behind the downfall.
The major reason behind decline was the announcement of demonetization of all Rs 500 and Rs1,000 banknotes by Prime Minister Narendra Modi on the evening of November 8th and introduction of new Rs 500 and Rs 2,000 as replacements.
Foreign Portfolio Investors were net sellers in 2016 offloading equities worth Rs 23081 crore in the Indian market in 2016.
2020: Trump vs Biden
The 2020 US elections took place amidst the global COVID-19 pandemic, which had already induced significant volatility in financial markets around the globe.
The BSE Sensex was at 41,349.36 points at the beginning of the year and later reached its lowest point 25,638.90 after crashing over 15, 700 points in March following the announcement of lockdown in wake of deadly Corona pandemic. However, market later recovered from the crash and reached 39,614.07 by October end.
Indian markets reacted positively to Biden's victory on November 9, 2020 , with the Sensex surging 704 points to close at record high at 42,597 at the time. The benchmark index continued to perform strongly in the months following the election crossing 47,000 by December 2020, driven by global market optimism, low interest rate and Biden’s announcement of a $1.9 trillion stimulus package.
Foreign Portfolio Investors were net buyers in 2020 buying equities worth Rs 103156 crore in the Indian market in 2016.
Trump vs Harris
The results of the upcoming US presidential election in November will not only have global implications but economic consequences as well, where supply chains span multiple continents. Policy formulation in the United States will have implications worldwide, such as trade disputes, rising prices, and job losses etc.
However, it is often observed that election campaigns are rarely conducive to policy making, as candidates make ambitious promises without considering their feasibility.
Tariffs are one of the most heated topics in the US election campaign. Recently, Former US President Donald Trump has reaffirmed to implement a strong tariff policy. He plans to impose a 10% tariff on all imported goods and a substantial 60% tariff on imports from China.
Trump asserted that these tariffs would force other countries to "pay us back" and could potentially generate "hundreds of billions of dollars" in revenue, according to an NBC report.
The Republican nominee in his first tenure referred to India as a "tariff king." In May 2019, he revoked India's preferential market access to the US, known as the Generalised System of Preferences (GSP), claiming that India had not provided "equitable and reasonable access to its markets."
The former president later increased import duties on Indian steel and aluminium products, prompting India to respond by raising import duties on various American goods.
In an interview conducted in August of the previous year, Trump strongly criticised India's tax rates, asserting that they were excessively high.
On the other hand, Kamala Harris, the Democratic nominee, has criticised tariffs, describing them as a form of "sales tax" that ultimately burdens American households. The Biden administration has already extended some of the tariffs imposed during Trump's tenure, focusing on goods like steel, aluminium, and technology components.
Although Harris has not explicitly stated her position on extending these tariffs, her campaign emphasises supporting American industries and addressing unfair trade practices, as per the NBC report.
Harris's plan includes providing tax breaks for middle-class Americans and increasing taxes on wealthier individuals to stimulate economic growth and reduce the deficit. The aim is to strike a balance between generating revenue and ensuring economic fairness without placing a disproportionate burden on consumers.
Immigration policies will also have a major impact on the India-US ties. While the Vice President Harris has a more liberal stand on immigration, her Republican candidate thinks differently.
Kamala Harris supports an earned pathway to citizenship. She has repeatedly called the current immigration system “broken” and called for “reform”.
“We can create an earned pathway to citizenship and secure our border. I will bring back the bipartisan border security bill that he (Donald Trump) killed, and I will sign it into law,” said Harris.
Harris has also supported skilled immigration. She aims to streamline the H-1B process, which could benefit Indian IT professionals and favour expanding family-based immigration.
This will benefit Indian tech professionals, companies, and might also increase remittances to India.
Donald Trump, on the other hand, has a restrictive approach on the issue and supports tougher immigration measures. He has announced that he would conduct mass deportations and put an end to birthright citizenship.
“Under my leadership, we will use all necessary state, local, federal and military resources to carry out the largest domestic deportation operation in American history," Trump said.
Trump had earlier sought to reduce the number of H-1B visas and impose stricter requirements, arguing that it would protect American jobs. He supports shifting to a merit-based system and to limit family-based immigration.
His administration also pushed for wage mandates that would make it financially challenging for companies to hire H-1B workers. Stricter H-1B rules will lead to uncertainty among Indian IT Professionals and can also reduce remittances.
The world is keenly watching the tight US race to the White House as the final outcome holds significant global importance. In India also, the potential consequences of a Republican or Democratic administration is being debated with great interest and anticipation by the investors, which are strategically adjusting their portfolios.
In the past, US elections have had a mixed influence on Indian markets, with uncertainty surrounding the next US President affecting market sentiments. However, it is important to recognize that the effects of US elections on Indian markets are typically short-lived, and over the long term, the market's structural trends become the dominant factors in determining its direction.
The economic collaboration between the two countries spans various sectors, including trade and investment, defense and security, education, science and technology, pharmaceuticals and biotechnology, civil nuclear energy, environment, clean energy, space technology and applications, health, and research & development.
The United States ranks as the third-largest contributor of Foreign Direct Investment (FDI) to India, at $49.56 billion in 2023, following Mauritius and Singapore. The cumulative FDI inflows from the US amounted to $65.19 billion from April 2000 to March 2024.
Washington DC is also an important trade partner, with total trade amounting to $128,782 million in 2023, which includes $ 78,542 million of exports and $50,240 million of imports. Meanwhile, the total trade between the two nations has crossed over $118 billion.
Additionally, Indians are the highest recipients of H1-B visas and in 2023 they received 72.3% of all the H-1B visas issued by the US for the fiscal year 2023, according to the data released by the US Citizenship and Immigration Services (USCIS). Also, IT giant Infosys received the highest approval of H1B visas for its employees along with other companies such as TCS, Tech Mahindra and Wipro.
Historical trend
2008: Obama vs McCain
The 2008 US Presidential election which saw Barack Obama emerge victorious on November 04, had indirect effects on global markets, including India but the Indian markets were primarily affected by the 2008 global financial crisis during that year.
The BSE Sensex plunged 10, 537 points from 20, 325 in January to 9,788.06 in October end primarily because foreign investors pulled out funds amid the crisis.The benchmark index further declined to 9,647.31 by the end of the year.
Foreign Portfolio Investors were net sellers in 2008 offloading equities worth Rs 41216 crore from the Indian market as a result of global risk aversion.
While the US election result itself did not immediately reverse this trend, Obama's promise of significant fiscal stimulus and reforms in financial regulations helped stabilise market sentiment in the months following the election. The Indian markets saw a period of recovery starting in 2009.
2012: Obama vs Romney
The BSE Sensex was at 15,534.67 points at the beginning of the year and was at 18,487.90 in the beginning of November. Following President Barack Obama's re-election for a second term, the Sensex fell by 1% in the week following the election, however it managed to record a gain of 3.5% in December, largely due to foreign investor buying.
Foreign Portfolio Investors were net buyers in 2012 infusing Rs 1,63,342 crore in the Indian market.
On the day before the election, the Rupee depreciated by 1.5% to 54.6075 per dollar, the largest single-day drop since October 8th, 2012, which led to an increase in the import bill and inflationary pressures.
2016: Donald Trump vs Hillary Clinton
In 2016, when Republican nominee Donald Trump faced off against Democrat Hillary Clinton, polls indicated that Hillary Clinton was ahead of Donald Trump. This boosted the confidence of investors worldwide, and Indian stocks consistently gained in the days leading up to the election.
The BSE Sensex was at 26,101.50 points at the beginning of the year and was at 27,966.18 in the beginning of November.
However, later the BSE Sensex not only fell 1.75 percent in the month prior to the election but also continued to decline by another 3.25 percent in the aftermath. However, that was not the primary reason behind the downfall.
The major reason behind decline was the announcement of demonetization of all Rs 500 and Rs1,000 banknotes by Prime Minister Narendra Modi on the evening of November 8th and introduction of new Rs 500 and Rs 2,000 as replacements.
Foreign Portfolio Investors were net sellers in 2016 offloading equities worth Rs 23081 crore in the Indian market in 2016.
2020: Trump vs Biden
The 2020 US elections took place amidst the global COVID-19 pandemic, which had already induced significant volatility in financial markets around the globe.
The BSE Sensex was at 41,349.36 points at the beginning of the year and later reached its lowest point 25,638.90 after crashing over 15, 700 points in March following the announcement of lockdown in wake of deadly Corona pandemic. However, market later recovered from the crash and reached 39,614.07 by October end.
Indian markets reacted positively to Biden's victory on November 9, 2020 , with the Sensex surging 704 points to close at record high at 42,597 at the time. The benchmark index continued to perform strongly in the months following the election crossing 47,000 by December 2020, driven by global market optimism, low interest rate and Biden’s announcement of a $1.9 trillion stimulus package.
Foreign Portfolio Investors were net buyers in 2020 buying equities worth Rs 103156 crore in the Indian market in 2016.
Trump vs Harris
The results of the upcoming US presidential election in November will not only have global implications but economic consequences as well, where supply chains span multiple continents. Policy formulation in the United States will have implications worldwide, such as trade disputes, rising prices, and job losses etc.
However, it is often observed that election campaigns are rarely conducive to policy making, as candidates make ambitious promises without considering their feasibility.
Tariffs are one of the most heated topics in the US election campaign. Recently, Former US President Donald Trump has reaffirmed to implement a strong tariff policy. He plans to impose a 10% tariff on all imported goods and a substantial 60% tariff on imports from China.
Trump asserted that these tariffs would force other countries to "pay us back" and could potentially generate "hundreds of billions of dollars" in revenue, according to an NBC report.
The Republican nominee in his first tenure referred to India as a "tariff king." In May 2019, he revoked India's preferential market access to the US, known as the Generalised System of Preferences (GSP), claiming that India had not provided "equitable and reasonable access to its markets."
The former president later increased import duties on Indian steel and aluminium products, prompting India to respond by raising import duties on various American goods.
In an interview conducted in August of the previous year, Trump strongly criticised India's tax rates, asserting that they were excessively high.
On the other hand, Kamala Harris, the Democratic nominee, has criticised tariffs, describing them as a form of "sales tax" that ultimately burdens American households. The Biden administration has already extended some of the tariffs imposed during Trump's tenure, focusing on goods like steel, aluminium, and technology components.
Although Harris has not explicitly stated her position on extending these tariffs, her campaign emphasises supporting American industries and addressing unfair trade practices, as per the NBC report.
Harris's plan includes providing tax breaks for middle-class Americans and increasing taxes on wealthier individuals to stimulate economic growth and reduce the deficit. The aim is to strike a balance between generating revenue and ensuring economic fairness without placing a disproportionate burden on consumers.
Immigration policies will also have a major impact on the India-US ties. While the Vice President Harris has a more liberal stand on immigration, her Republican candidate thinks differently.
Kamala Harris supports an earned pathway to citizenship. She has repeatedly called the current immigration system “broken” and called for “reform”.
“We can create an earned pathway to citizenship and secure our border. I will bring back the bipartisan border security bill that he (Donald Trump) killed, and I will sign it into law,” said Harris.
Harris has also supported skilled immigration. She aims to streamline the H-1B process, which could benefit Indian IT professionals and favour expanding family-based immigration.
This will benefit Indian tech professionals, companies, and might also increase remittances to India.
Donald Trump, on the other hand, has a restrictive approach on the issue and supports tougher immigration measures. He has announced that he would conduct mass deportations and put an end to birthright citizenship.
“Under my leadership, we will use all necessary state, local, federal and military resources to carry out the largest domestic deportation operation in American history," Trump said.
Trump had earlier sought to reduce the number of H-1B visas and impose stricter requirements, arguing that it would protect American jobs. He supports shifting to a merit-based system and to limit family-based immigration.
His administration also pushed for wage mandates that would make it financially challenging for companies to hire H-1B workers. Stricter H-1B rules will lead to uncertainty among Indian IT Professionals and can also reduce remittances.
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