In a week's time, we all will come to know who will be the head of state of world's most powerful country. With such a big macro event in offing, it will surely have an impact on all financial asset classes.
Indian Equity markets are trading within 5% range from all time highs. Noticeably, it has recovered a whooping 60% from this year's low which makes the decision all that difficult on how to position oneself for this political event. Let us evaluate the possible outcome on Equities, Precious Metals & US Dollar in case of Joe Biden and Trump win respectively.
Equities
If Joe Biden wins
Some parts of Equities would definitely do well if Joe Biden wins. Tech stocks especially those which came under heavy fire from Trump would do very well. Even for Indian IT Stocks, it will be a good news which is right now comes under regular fire due to 'Make America Great Again' slogan. Similarly, global commodities should also do well on account of softer regime in place in USA. On the other side, Joe Biden regime may not be as corporate friendly and supportive as Trump administration and hence broader market may see a sentimental sell off.
If Trump wins
US Equities would surely see a bump up in case of Trump win as it will seen as a thumbs up of economic policies of incumbent president. On the contrary, Tech stocks may see a sell off due to reasons mentioned above. For Indian Equities, it is again positive since major political event has passed without any disruption.
Precious Metals
If Joe Biden wins
Precious metals should either decline or remain stagnant since Joe Biden brings more amicable and moderate face to US regime and hence doesn't bring that level of unpredictability as Trump is.
If Trump wins
Trump win would keep Precious Metals on a stronger feet since he will definitely tweet 'more' in the coming few days 😀. So brace yourself with a pot of Gold if Donald Trump wins.
USD and INR
If Joe Biden wins,
USD will definitely pump on Joe Biden win since he may not take aggressive stance as Trump. This will in turn pressurize INR and it can depreciate to levels of 75 Rs against USD.
If Trump wins,
USD should further depreciate since Trump promises low interest rates for a long period of time. He also doesn't have any problem with bludgeoning Fed Balance sheet.
Considering both possible outcome, it is wise to move some funds from Equities to Gold for next 3 months especially for Indian investors since Gold is better poised to outperform Equity in both scenarios.
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