US Elections: Indian stocks that will be affected and what it means for IT

The US elections will be the key focus this week. Domestic stocks with high revenue exposure to the US markets (see table) will be on investors’ radars.
Several Indian information technology (IT) and pharmaceutical stocks have substantial revenue exposure to the US. Fortunately, Indian stocks have a low-beta and low-correlation to the US markets, according to an analysis conducted by Morgan Stanley. For instance, TCS and Infosys, which derive more than half of their revenue from the US, have a 0.5 beta to the S&P 500 index. In other words, if the S&P500 falls by two per cent, these stocks fall by only a per cent. Among the emerging markets, stocks in Mexico, Brazil and Russia have high-beta correlation to the US market and would face more direct implications from the US election outcome, says Morgan Stanley.  Hillary Clinton’s victory would have implications for pharma companies due to a greater possibility of US drug price regulation. Donald Trump’s victory could have implications for IT companies due to possible curbs over outsourcing and immigration.