Impact of US Political Events on Indian Stock Market.
                     Impact of US Political 
Events on Indian Stock 
Market
INTRODUCTION
• As the outcome will affect the rest of the world and 
global equities, and besides determining the position on 
China, US presidential election results due on 3 
November will be closely monitored. 
Source: livemint.com
Are markets affected by political outcomes?
• The performance of stock market indices depends on 
different factors, both domestic and global. 
• Some key factors include the underlying macros, such as 
interest rates, inflation, economic sentiment and 
domestic policies, which are dependent on the outcome 
of the political developments across the globe. 
Source: livemint.com
Domestic Vs Global Political Outcomes
• The domestic election outcomes have the potential to 
change the policy regime, which in turn, has a bearing 
on the performance of the stock markets. 
• Similarly, global political outcomes, too, result in a 
change in domestic policy expectations, which 
influences stock markets.
Source: livemint.com
How do markets typically respond after the elections?
• When a new party comes to power, the markets 
calculate 5%-plus advances on an average basis, and re-
election sees a boost of six points. 
• In general terms, investors favour bonds over shares as 
a protected asset in the post-election year.
Source: www.wealthnote.in
How will the US polls impact India relations?
• The 2020 elections would influence a specific way 
US diplomacy would bring the effect on main 
international policy concerns, strategic partnership 
issues and global trade outlook into consideration. 
• Independently of the political result, continuity will 
remain in favour of a more in-depth diplomatic, 
economic and technical relationship between India 
and the USA. 
Source: livemint.com
What about the effect on Indian indices?
• The political consequences of the results of the 
presidential vote would set goals of any potential 
policies. 
• Bringing the U.S. president onto the debt, new U.S. 
liabilities and likely interest rates would affect 
worldwide financial markets, particularly the ones in 
India. 
Source: businesstoday.com
Monetary and fiscal policies
• The appointments of the US Federal Reserve would 
also play important positions. 
• With today's weakness in world economic 
development, however, the proliferation of 
aggressive monetary and fiscal policies could 
become much less probable than soon.
Source: theconversation.com
What does it mean for Indian markets?
• It must be pointed that economic boosts in the U.S. 
while funding Indian assets is among the dominant 
forces behind the growth in investments markets have 
also taken routes in those countries. 
• After April 1, 2020, the investment of foreign portfolio 
investors of Rs 2.22lakh crore in Indian capital 
generated Sensex and Nifty, respectively, 63.4 and 
64.4 percent.
Source: businesstoday.com
How have US markets responded to polls?
• In USA political situation, there is a lot of space for 
an extremely sophisticate economy, like that of the 
United States, with one of the world's most 
sophisticated financial structures. 
• Typically, in any given year, US equities on an 
average register 8.5%-plus growth.
Source: livemint.com
Outcomes of US presidential elections
• Unlike the six per cent growth reported in pre-election 
years in USA equities, this is in stark contrast. 
• This constricted productivity is attributed mainly to the 
complexities in the coming years affecting the outcomes 
of US presidential elections and to their impact on key 
economic policies to be implemented under the reign of 
the new president.
Source: economictimes.com