Trump’s rhetoric on ‘America Frist’ and vows to bring back American jobs may have won him the US top post, experts believe things for the two export-oriented sectors may not change drastically in his tenure.
“Considering the evolution of political alignment among US, Japan and India, we do not see the new leadership taking any aggressive stance against India's IT and Pharma exports,”said G Chokkalingam, Founder, Equinomics Research & Advisory.
On Wednesday, Nifty Pharma index pared its entire losses to jump 1.92 per cent to 10,871 points, led by gains in Dr Reddy’s, Sun Pharma and Cadila. The index had fallen to its lowest since August 2014 in the early trade.
Nifty IT index also pared initial losses to settle the day at 9,683 points, down 3.25%, led by losses in TCS, Tech Mahindra and Just Dial.
Pharma stocks are trading at a record 138 per cent premium to the US generics peers in terms of forward P/E multiples. Experts say valuations on most pharma counters, especially in the midcap space, is unjustified and demand a steep correction going ahead. The increased scrutiny and policy changes in terms of imports of generic drugs to US, may just be one such excuse, they said.
Meanwhile, Deven Choksey, MD, KR Choksey Investment Managers is positive on the IT sectorand sees no reason why one should be worried about a Trump victory.
“IT companies have already created employment along with other onshore facilities in US, and I see no reason why US government will not utilise the same,”said Choksey.
IT industry body Nasscom believes Trump’s victory is fairly positive for India, primarily because he had said that India and US would be the best friends if he were to become the President.
“He did make certain comments with regard to high-skilled immigration, but we believe those were based on certain fabrications fed to him by critics of the IT industry,”said Nasscom.
Chokkalingam, on the other hand, expects a marginal fall in IT stocks going forward, but not due to Trump victory.
“The IT sector has its own problems in terms of higher base of IT sector (over $100 billion annual exports) and slowdown in the economic growth of euro zone,” he said.