Short Call | What if Trump returns? HUL, Inox Wind in focus

In a nutshell, India could continue to witness external tailwinds if Trump makes it back to the Whitehouse.

Former US President Donald Trump and Vice President Kamala Harris are set to clash in their first presidential debate today. For all Trump haters in the stock market, it may be worthwhile to recall that during his last presidency from January 20, 2017 to January 20, 2021, things weren't too bad.  The Dow Jones Industrial Average gained over 58%, the S&P 500 surged by over 70%, and the NASDAQ Composite skyrocketed by a massive 143%.

Back home, Nifty 50 gained nearly 74% and Sensex surged by 83% during the period.  What could Trump 2.0 mean for the Indian stock market? Well, according to a recent Nomura report, India might just stand to benefit. In fact, Nomura picks out India and Malaysia as outperforming markets as against Taiwan, Hong Kong and China.

For the US, another Trump presidency could lead to higher inflation, larger fiscal deficits, and continued higher rates, according to Nomura. But here's where India might have an edge: its economy, driven mostly by domestic demand is expected to weather the storm relatively unscathed. Trump's policies especially the push for supply chain shifts away from China by imposing high import tariff barriers could also give India a much-needed economic boost. Nomura's analysts even go as far as to say that Indian equities could be the "key relative safety trade."

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Besides, Nomura says that India's significant foreign exchange reserves, stable inflation-growth balance, fiscal discipline, and focus on reforms could act as a cushion against any volatility from US policies. Plus, industries tied to domestic consumption and infrastructure are likely to keep growing, even if international markets face some disruptions. "India is a large, domestic demand-driven economy, so the economic fallout of weaker U.S. economic growth should be limited," noted Nomura's research analysts Sonal Varma and Aurodeep Nandi.

Another potential win for India? Capital inflows. "India's reliance on foreign capital flows is low, but index-related flows will likely continue. We forecast $30 billion of FPI inflows into India during FY25," Nomura said. That's a strong signal of confidence in India's economic fundamentals.

The worrying piece for India will be the anti-immigration policy. Trump's stance on immigration could tighten, which might affect the Indian tech sector's reliance on H-1B visas. Still, as Nomura points out, Indian IT firms have already started to pivot, reducing their dependence on these visas over the years.  In a nutshell, India could continue to witness external tailwinds if Trump makes it back to the Whitehouse.

Also Read | Trump, Harris tied on eve of televised presidential debate

Inox Wind (Rs 234.90, +4%)

Axis Securities maintains ‘Buy’ rating on the stock and raised target price citing unlocking of new revenue streams

Bull Case: Inox Wind is poised for growth with robust order execution guidance, aiming for 800 MW in FY25 and 1,200 MW in FY26. The brokerage increased its FY27 execution estimate of 1,560 MW to 1,750 MW as the tailwinds in the sector provide more visibility.

Bear Case: Inox Wind faces risks from potential delays in execution and under-subscription in auctions, which could slow down the wind turbine market. Such setbacks might impact the company's growth trajectory and hinder its ability to achieve set targets.

Hindustan Unilever (Rs 2,920, 2.85%)

Unilever, the parent company of HUL, announced its intention to separate its global ice cream business across jurisdictions. As a result, HUL is evaluating the way forward for its ice cream business and will make recommendations to the board.

Bull Case: HUL's ice cream business has been recording 15 percent sales growth per annum. Growth in quick commerce and rising urbanisation will spur growth in the frozen desserts and ice cream area. The

Bear Case: Slowing consumer demand and heightened competition with new entrants can impact the ice cream arm, spun-off or not.

(With inputs from Harshita and Zoya)