The US will elect its 45th President tomorrow and stock markets across the world will feel the impact. In the race are Democratic Party nominee Hillary Clinton and Republican party nominee Donald Trump.
Polls show Hillary Clinton has an edge over Trump in the election.
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The global markets have been bouyant over prospects of the Democractic candidate since FBI announced late Sunday that its review of newly discovered Hillary Clinton emails found no evidence warranting charges. Indian markets too have felt the effects of clean chit to Clinton.
However, there will be lot of uncertainty till the results of the poll will be announced. We look at how Indian markets are likely to react to US poll outcome.
If Clinton wins
- The Indian markets are likely to see a rally in case poll forecasts signaling a Clinton victory come true. Till now, Sensex and Nifty have moved positively on news of a possible Clinton victory.
- However, the gains are likely to be limited. "The market has already priced in a Clinton victory," Margaret Yang, a CMC Markets analyst in Singapore told Bloomberg. "Any upside will be limited if she wins." Barclays said in a report that the S&P 500 Index could gain as much as 3 per cent.
- The rally is likely to fizzle out on the same trading day when the Indian market will take into account its fundamentals.
If Trump wins
- Markets across the world have not factored in a Trump victory, including India. A Donald Trump victory will send markets across the world into a kneejerk reaction. Barclays predicted an S&P 500 nosedive of as much as 13 per cent if Trump wins. Citigroup equity strategist Tobias Levkovich put the hit at no more than 5 per cent in a report.
- The Indian market will certainly feel the aftershocks of the event. According to experts, indexes may fall at least 1-2 per cent on an unexpected Trump win, tracking their global counterparts.
- Indian IT company stocks may take a hit after the poll outcome as Republican presidential nominee Donald Trump recently said his government would stop the jobs from leaving America. Trump accused US tech giant IBM of laying off 500 workers in Minneapolis and shifting their jobs to India and other countries as he warned of levying a 35 per cent tax on companies doing so if he is elected.
- The correction in Indian market after a Trump win is likely to offer good buying opportunities for investors.