Stocks to Buy: Donald Trump is set to become the 47th President of the United States of America, with the impact of the election outcome likely to be felt on trade policies, foreign investment and currency movements.
Let's take a look:
The markets rejoiced with Nifty and Sensex gaining close to 1%. Deepak Jasani, Head of Retail Research, HDFC Securities, said that the outcome of the US Presidential Elections is positive for the market in the near term. Apart from China, most global markets may see positive traction with some volatility in Europe, Jasani said.
On the technical front, Nifty saw a strong recovery from the 23,800 level, with 24,650 acting as an immediate hurdle. “Above 24,650, the 25,000-25,200 zone is a critical resistance area. Immediate support is at 24,040, with further support at 23,800,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
Bank Nifty is outperforming, with an immediate resistance zone at 52,300-52,600, said Gour. Above 52,600, the next target levels are 53,300, followed by 54,000-54,500, and immediate support lies at 51,800 and 51,600, with strong support at 51,000, he added.
The Trump card possibility could lead to the rise of the UST 10-year yields, which would, most likely, have a butterfly effect, resulting in the rise of the Indian 10-year benchmark yield to above 6.90%, said Shrisha Acharya, Vice-president, Anand Rathi Global Finance.
The Indian rupee depreciated as the US dollar strengthened. The dollar can remain firm with Trump coming to power. The lower crude prices and a positive trend in domestic equities, however, will provide support to the rupee.
Crude oil prices corrected, with Brent Crude falling 1-2% to $74.5 a barrel. Crude oil prices may remain rangebound as Trump's policies could accelerate oil exploration and production activities.
Oil marketing companies such as Bharat Petroleum Corporation, Indian Oil Corporation and Hindustan Petroleum Corporation may be key beneficiaries if crude prices remain lower.
A Trump victory might also result in more energy cooperation, especially given India's expanding energy requirements. The details of Trump's policy and India's response will determine the overall effect, said analysts.
While a stronger dollar is positive for exports, analysts are of the view that Trump's "America First" approach to trade policy might have a big effect on the Indian market. Increased tariffs and protectionism could hurt India's exports to the US, said Gour.
A win for Trump might not be positive for the technology sector. A Trump government may be less enthusiastic about the commercial connection between the US and India, which might have an impact on collaboration and investment in fields like technology and defence, said Gour.
Chokkalingam G Founder, Equinomics Research Pvt Ltd, expect consolidation in the IT space to continue with more mergers and acquisitions activities likely.
Domestic-oriented sectors are better placed feel analysts. While automobiles, FMCG and cement may see single-digit growth, banks, infrastructure and pharma are better placed, said Chokkalingam. Tyre manufacturers could be better placed in terms of earnings growth with a decline in natural rubber prices and crude prices remaining rangebound.,
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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