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Donald Trump elected 45th US President: Top five takeaways for Indian stock market

America has given its verdict. Donald Trump has become the 45th President of United State of America, defeating Hillary Clinton.

Various opinion polls in the US had suggested an edge for Democrat Hillary Clinton, but Donald Trump pipped her in a close race. To gain a majority, a candidate needs to secure a minimum of 270 votes.

Going by the buzz on Dalal Street, here are top five takeaways for the domestic stock market from the US presidential election.

No long-term impact:
Donald Trump, the 45th US President, was not a favoured candidate for markets, not just for India but across the globe. Hence, a kneejerk reaction is warranted. However, it will not spoil the long-term story for the Indian market, which is still in a sweet spot.

Vinod Nair, Head of Research, Geojit BNP ParibasBSE -0.39 %, told that there would be no long-term impact on the Indian market. “One reason for that is that the institutional structure of the US is much above any personal view, and thus not big sectoral impact is expected in India,” he said.

Impact on pharma sector:
Indian pharma companies, especially the ones with significant exposure to the US market, could see some rub-off effect. An uncertain regulatory environment is likely to cause more damage to the generics market.

Both presidential candidates are in favour of allowing the US government’s Medicare programme which accounts for about 20 per cent of the total US drug spend.

US-sensitive stocks in focus:
India companies with substantial meaningful exposure to the US market would come into focus. Morgan Stanley has handpicked 11 stocks which are US-sensitive
under two categories – high beta and low beta.

Among the high-beta stocks are names like Tata MotorsBSE -0.51 % and Bharat ForgeBSE 1.99 %. In the low beta bracket, there are US sensitive names such as WiproBSE -1.87 %, GlenmarkBSE 0.88 % pharma, HCL TechnologiesBSE -2.40 %, RILBSE -0.58 %, TCSBSE -4.19 %, LupinBSE 3.09 %, InfosysBSE -3.62 %, UPL and Tech MahindraBSE -4.02 %.

Impact on rupee:
High volatility is expected in the currency market not just for the rupee, but also other currencies across the globe. “The impact is vastly uncertain – both in short as well as medium term. The dollar will initially sink against the currencies of developed countries, such as the UK, Japan and Switzerland — if Trump edges the contest,” said Kumar of Upstox.

Impact on IT sector:
The immigration issue dominated most part of Trump’s campaign. He said he would bring back jobs from India and stop the high-skilled H-1B visa program.