US midterm elections could impact Indian markets, analysts say
A Democratic victory in the US midterms may provide short-term stability for Indian equities despite potential global volatility.
Investors are monitoring the US midterm elections to gauge potential shifts in global geopolitical uncertainty. Current results suggest a possible victory for Democrats in both the US House of Representatives and the Senate, according to a report by The Times of India.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, stated that the US midterms are unlikely to significantly affect the Indian stock market regardless of the result. He noted that a Democratic majority could limit President Donald Trump's power regarding tariffs, potentially benefiting India as a counter AI trade.
Somil Mehta, Head of Retail Research at Mirae Asset Sharekhan, said the elections might cause short-term volatility in India, but the long-term direction will likely be driven by corporate earnings, FII flows, US bond yields, the dollar, and crude oil prices.
Madhavi Arora, chief economist at Emkay Global Financial Services, noted that Democratic control could use legislative oversight to restrict the president's actions, though he would retain authority over foreign policy, immigration, and tariffs.
Emkay Research also warned that an escalation in the Iran conflict could pressure India's equities, foreign exchange market, and balance of payments, irrespective of the election outcome.
Historical data shows the Nifty has seen strong gains over one, three, and six-month periods following US midterm elections. An analysis of seven midterms since 1998 showed the Nifty recorded gains in five instances across those timeframes.