There were fireworks earlier this week on the Street ahead of Diwali 2020, and in other equity markets across the globe as investors cheered better global ties as well as more monetary stimulus under US President-elect Joe Biden.
The S&P BSE Sensex hit fresh record highs above 43,000 for three consecutive days, and the Nifty50 hit 12,600 levels earlier this week.
Democrats favour a bigger stimulus for the economy which could turn out to be positive for emerging markets like India. FIIs have already turned net buyers for more than Rs 30,000 cr in the cash segment of Indian equity markets since April.
“Biden’s win is definitely fueling the Indian markets because as a leader he is more inclusive and open to geopolitical trade relationship as opposed to the nationalistic views of Trump,” Vinay Bharathwaj, Co-Founder and Co-CEO, Stockal Inc. told Moneycontrol.
“He wants to open up the country to more job opportunities for technology outsourcing, which will definitely help India. Normally we'd wait 'n watch to see if US elections have a bearing on Indian markets, but with Indians trading worth ~Rs.300crore every month in the US on Stockal, for the first time this year thousands of Indian retail investors are looking at how US markets react to the results!,” he said.
We have collated views from various experts on sectors that could benefit the most from Biden win:
Expert: V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
IT would be a major beneficiary
Regarding sectoral fortunes, IT stands out. Democrats have a liberal track record on granting visas. Already the IT industry is on a strong wicket with impressive growth in digital services.
The management commentaries from most IT companies indicate that we are on the cusp of a multi-year expansionary cycle for IT services. Biden's presidency will be a shot in the arm for the industry. Investors staying put in IT stocks will stand to gain.
The impact of the US election results would be transient. The long-term market trend would be dictated by the course of the virus and its economic impact. The second wave of the pandemic has been brutal in Europe and parts of US. The lockdowns are likely to delay economic recovery.
Expert: Vinay Bharathwaj, Co-Founder and Co-CEO, Stockal Inc.
Renewable energy, electric vehicles, financials:
Joe Biden’s victory might see some investment in sectors like renewable energy, electric vehicles etc. as he is big on the global warming agenda. Financial institutions and other fintech players are likely to register an uptrend.
Biden’s initiatives to include Asian countries in trade will aid in stabilizing the overall trade economy of the US and push the demand for stocks in these markets as well.
Talking about gold and commodity stocks, these asset classes and stocks will go as per the existing market conditions, we don’t foresee any impact on these due to the US elections.
Even in the previous election years, we have not seen any drastic or noticeable change in the movements of these stocks. We see the IT sector hiring manifolds after the relaxation of the H1B visas due to Biden which will improve the overall sentiment of the investors and encourage them to invest in these sectors.
Now, the surprise vaccine news is setting the stock market up for big gains. We can now see S&P 500 hit 3,600 by year-end and 4,000 by early 2021 with “a good potential” to move even higher to 4,500 by the end of 2021, or ~24% from here.
Expert: Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers
IT & Healthcare:
In terms of global alliances, we believe, the new president would be less focused on protectionism. Biden, with experience in handling international relations, is likely to further boost global trade relations and India remains a preferred partner over China.
Sector-wise, the IT companies in India has long been dependent on the H-1B visa programme and faced criticism under the Trump administration.
However, the Indian IT sector is likely to benefit under Biden Presidency, given the new president’s softer approach towards immigration and plans to increase the number of high-skilled visas, including the H-1B, and remove the limit on employment-based visas by country.
Further, Biden’s focus on affordable healthcare with generic drugs creates optimism for Indian pharma companies, given India’s global leadership position in generic medicines.Disclaimer
- The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.