As the U.S. Presidential Election 2024 nears, Indian investors are closely watching its potential effects on the IT sector, which relies heavily on the U.S. market. Indian IT giants, including TCS, Infosys, Wipro, HCL Technologies, and Tech Mahindra, derive a substantial portion of their revenue from American clients, making this election significant for their growth prospects. The India Brand Equity Foundation projects India’s IT and business services market to reach approximately $19.93 billion by 2025, further underscoring the sector’s dependency on stable U.S. relations.

Market experts offer a mixed outlook. PhillipCapital cautions that a Trump victory might introduce challenges due to his history of anti-immigration policies, which could impact the IT workforce in the U.S. In response, Indian IT firms have been employing more local U.S. staff, relying on subcontractors, and establishing nearby delivery centers to offset risks tied to immigration. Meanwhile, Saurabh Patwa of Quest Investment Advisors suggests that U.S. elections have historically shown minimal influence on corporate IT spending patterns, and he expects this election to be no different for Indian IT firms.

Currency fluctuations may also affect IT companies more directly than other sectors, as highlighted by Arun Kejriwal, founder of Kejriwal Research and Investment Services, who believes these factors could lead to greater volatility in IT stocks.

The market expects a gradual recovery in the BFSI (Banking, Financial Services, and Insurance) sector in the U.S., alongside stabilizing demand across key verticals. While seasonal pressures, such as wage hikes, could impact margins, falling interest rates are expected to support a boost in discretionary IT spending, benefiting Indian IT companies into FY25.

This election’s outcome may set the tone for U.S.-India relations, particularly in sectors beyond IT, such as defense, energy, and pharmaceuticals. Experts believe that the market impact may remain balanced, depending largely on how the new administration approaches bilateral relations and economic policies.

Disclaimer: The views expressed are those of individual analysts and broking firms, not of NRIPage. Investors are advised to consult certified professionals before making any investment decisions.