Metals, OMCs, manufacturing could gain with Trump win; IT could face headwinds

Trump’s anti-China stance could lead to increased demand for manufacturing in India

As the uncertainty surrounding US Presidential elections end with Donald Trump emerging victorious in the fight against Kamala Harris, the spotlight has turned towards sectors that could gain — or lose as well — given Trump’s history in dealing with geopolitical and economic matters.

Market experts in India believe that a Republican majority in the US could cast a strong spotlight on specific sectors in India, providing tailwinds for some while posing challenges for others. Metals, oil marketing companies, and manufacturing are likely to benefit from the change, while IT may face a tougher road ahead.

Sectors to benefit

Metals

Trump’s anti-China stance could positively impact Indian metal producers as China has been a major exporter of metals and has been dumping metals at very low rates, said V K Vijayakumar, Chief Investment Strategist, at Geojit Financial Services. He added that Trump is likely to impose higher tariffs on metal imports from China, a move that would benefit Indian metal companies, as it could create opportunities for them to export more to the US. This will be beneficial for companies like Tata Steel, JSW Steel, and Hindalco, he said.

Oil Marketing Companies (OMCs)

Prices of crude oil are expected to remain stable because of Trump's aversion to conflicts and wars specially in regions like Middle East and Russia-Ukraine, said Siddarth Bhamre, head of research at Asit C Mehta Investment Intermediates. He added that this will benefit OMCs and crude derivative companies like paints because of lower input costs and hence higher margins.

Manufacturing

Trump’s anti-China stance could lead to increased demand for manufacturing in India as businesses seek alternatives to China, said Bhamre. This might boost the capital goods sector, supporting infrastructure and machinery investments needed for manufacturing setups, he added.

Sectors to face challenges

Information Technology (IT)
IT services may experience mixed impact from increased US corporate spending driven by tax-cuts alongside a tougher offshore outsourcing environment, said Trideep Bhattacharya, Chief Investment Officer - Equities, Edelweiss Asset Management.

Similarly, Bhamre expressed concerns about the IT sector, highlighting the fact that Trump, in his previous term, prioritised American jobs and encouraged IT companies to hire locally for on-site roles, which could increase costs for Indian IT firms and impact margins. Bhamre, however, adds that while the sector may face some headwinds, Indian IT companies are better prepared now for such scenarios.

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