From ICICI securities report- impact on india post trump win

Trump's win and a Republican-controlled Congress may have notable implications for India's economy and markets:

1. Opportunities Amidst US-China Trade Tensions: With Trump's previous pattern of raising tariffs on Chinese goods, a renewed focus on China might benefit countries like India. Given India's current emphasis on manufacturing, it could seize new opportunities in global supply chains as companies look to diversify away from China.

2. Exchange Rate Movements: The USD is expected to strengthen due to higher US yields, which could apply pressure on the INR. Though this may increase the USD/INR exchange rate, the RBI is likely to intervene to prevent excessive depreciation. The expected range for the USD/INR is between 84-85 in the near term.

3. Impact on Inflation and Interest Rates: Rising US yields could influence global bond markets, including India’s. Indian sovereign yields may rise slightly as a knee-jerk reaction. Over time, this could increase borrowing costs domestically if inflation and rates stay high globally.

4. Export and Trade Impact: An escalated trade war, if it spreads beyond China, could have mixed effects on India's export sectors. While some industries may benefit by filling the gaps left by tariffs on Chinese goods, others may face global trade disruptions if a broader tariff war unfolds.

5. Global Growth and Commodity Prices: The likely softening of Chinese growth due to tariffs could limit the upside on crude and metal prices. This is favorable for India as a major crude importer, potentially aiding in keeping inflation in check. However, weaker global growth could affect India’s export demand over time.

6. Gold as a Safe Haven: Rising global uncertainties could drive demand for gold as a safe-haven asset. India, as a significant consumer of gold, might see shifts in import costs depending on gold price trends.