‘US elections set to affect Indian markets,’ Ajay Bagga’s guide for today

Quick Guide to Today: US Election vote counting has started. Markets are reacting to every news flow, as they are primed to do. Election Day will turn into Election Night. The risk is , it could become Election Week or Weeks . With elevated volatility, markets will lurch from Trump Trades to Harris Trades, bursting through stop losses on both sides. Best to wait this out, at least for today. The 7 Swing States are staying too close to call. Voting in some states will continue till 12 midnight ET US time. We are getting calls on winners in East Coast states already . Patience is the biggest virtue for investors today. Let a winner emerge, we will be back with an analysis of what will work for India and what will not. For now, wait.

1. US Presidential results may take time, especially if the margin is very tight. 

2. Expect lawsuits, counterclaims and recounting in a few districts.

3. US Senate and US House of Reps majorities will be clear within the next few hours so those will give us an idea of how the White House incumbent will be constrained or be enabled to run their Policy Agenda.

4. There are different Policy outcomes based on who wins the White House today. 

5. However, the on-ground Policy outcome will start taking shape post the new President's inauguration on January 20th. 

6. Markets are reacting and will react much ahead of January 20th.

7. Key Policy issues will be around Immigration, US isolationism/protectionism/tariffs, US fiscal deficit and Debt levels, Taxation, Regulation, Health insurance, Defence ties with allies and the ability to contain/ stop armed conflicts in Ukraine and the Middle East.

8. Emerging Markets including India will see an impact through tariffs, commodity prices, and portfolio flows.

We will analyse the policies once there is clarity on the White House Winner.