After Trump’s big win, how positive is the impact going to be for India and which sectors, which stocks, which pockets of this market are likely to benefit from what has happened in the United States?
Overall Trump’s victory is positive for India, which is much better than a democratic government. But it’s the US. So we have to see that both sides will have enlightened interests but relations are important in international politics. In terms of sectors that will do well, immediately oil and gas should do well and you should see lower oil prices, lower commodity prices around the world which will help our markets, some amount of pharma as they try to deal with their huge healthcare bills. . , of course on the other hand they have said 20% tariff on all imports, so all Indian importers may face something like this, seems like a small possibility, maybe a negotiating ploy to open up other markets for us goods and services. It will be known by March.
The inauguration is on January 21 and much more action is expected on the immigration front, the anti-China front and India may be given some time. Normally, they are allowed to give a country a year or six months while they negotiate a trade deal, giving India some time.
Overall, the move in India will be more defensive. China stocks are expected to go down further which is a mild positive for us, but the big issue for India right now is to continue FII selling and unless it comes down, it is very difficult for our markets to move on this valuation with earnings, Trump or No. Trump.
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Trump with a stronger dollar overall will be mildly negative for the flow, but we expect Trump’s stated position to be a weaker dollar, so expect him to take some action from the US Treasury to lower the dollar and weaken the dollar. , they don’t want a strong dollar so that can ultimately help the currency and flows, but that’s another order effect that we’ll see around March, April.
When you look at consumption as a whole space, do you prefer to play it with core FMCG companies or retail companies? What is the outlook there and what is your recommendation on this front?
Core FMCGs, contrarian call FMCGs are staples, as they are currently least liked or disliked in the market and consumption will return. Consumption will rebound as government spending picks up in September. Unfortunately, we don’t have many triggers anymore to really force a Santa Claus rally. So, we have to wait for December to pass. I think there could be a reversal of FII until the new allocations come in the new year and then you have the big event of Trump’s inauguration in the last 10 days of January and what he does in his first month. So, I think FII reversal may take till February, that is bad news. The good news is that I think earnings will start to improve from here. So, we don’t go down much from here. We may have bottomed out on earnings and this is where it starts to slowly recover and could be a good play for consumers to start with.
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