The victory of Joe Biden in the US Presidential election could help Indian IT companies, says Vinay Bharathwaj, Co-Founder and Co-CEO, Stockal, a fintech company that enables investing in the US markets, from anywhere in the world. Biden’s win could also help pharma and renewable companies in the US, says Bharathwaj. Edited excerpts:

With the election of the new US President, what will be the impact on the US market, from a near-term and long-term perspective? 

We expect the volatility of the market to stabilise as the President takes office. Historically speaking, I don’t think there will be an impact or there is a correlation between what the election results are and how the market is performing. There has been no clear cut trend in the way markets operate but generally speculative play makes the market react. The overall market performance would be more or less the same as per our past experience. 

We expect a stimulus package which needs to be put in the healthcare sector due to the situation at hand and also from an overall economic perspective. So it’s safe to say that the pharma industry is likely to do well during this time. The winning of Biden might see some investment in sectors such as renewable energy. Financial institutions and other fintech players are likely to register an uptrend. 

What factors should investors now keep in mind while investing in US stocks now?

Those who have invested in the US market or are looking for opportunities to invest in the market should not be flustered about the outcomes of the election. If we analyse historical data, we will see that the only time the equity markets has dipped between 3-6 months after the election was in 2008 fuelled by the financial crises. Also in 2001, the markets had fallen due to the terrorist attack exactly a year after elections. For all the other presidential elections, the trend has been a cheering up of the market with an average gain of 15 per cent. This suggests that the equity market could go higher irrespective of the election report card. Having said this, one cannot deny that the markets could be volatile and the impact might be dramatic if either of the candidates urges on contesting the outcomes. But this will be short-term until stability is restored.

Some sectors in the US that are likely to see either revival or accelerated growth after the election would be airlines, technology, electric vehicles, construction and engineering and renewables. Indian investors who are keen to invest in the US stock markets should not be impatient and re-plan their investment allocation based on the election results. The election might give long term investors a chance to revisit their portfolio and make small gains rather than revamping them. With Biden coming to power, investors should keep a close watch on renewable and EV companies.  

What is the likely impact of this election on global trade, equity markets, emerging markets and Indian market?  

From a geo-political perspective, with Biden, there will be overall stability in the region. A stable government is beneficial for any country, and economic and social prosperity will directly contribute to market growth.  We feel India needs to be a strong ally of the US to be able to sort the issues with China; this doesn’t seem to be largely impacted by the election results. 

Which Indian sectors and companies are likely to benefit and lose from this election? 

One of the Indian sectors that will see an impact will be the Indian IT sector as the contesting parties have a diverse opinion on hiring and outsourcing of talent from India. With Biden there might relaxation in the strict policies on H1B and on hiring and retaining of Indian employees in the US. Apart from that, we don’t see Indian sectors getting impacted by the US elections.

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