Even as the Republicans fell short of the expectations of the mighty ‘red wave’ in the US mid-term elections, capturing the House of Representatives with a thin majority, the markets are not disappointed.
According to experts, the US mid-term election results are not likely to have any meaningful impact on emerging markets like India. However, key issues like inflation, monetary policy normalisation, policies influencing economic growth, push for spending cuts and fiscal consolidation will remain central for market investors and economists. Analysts expect India to outperform developed markets despite the US Federal Reserve accelerated policy to hike rates to tame inflation.
Analysts feel that a Republican win in the mid-term US elections may be mildly positive for Indian equities. “Results show the expected ‘red wave’ has not materialised. Overall, a divided government is good for businesses since the current democratic government led by Biden will not be able to pass legislation for higher taxes on corporates while also being more restricted in increasing government spending, which would have otherwise led to higher inflation,” says Nishit Master, portfolio manager, Axis Securities PMS says.