Traders on India's Dalal Street were pulling for the re-election of US President Barack Obama, despite Wall Street's liking for challenger Mitt Romney, according to FirstPost.in. But now that the race has been called for the Democrats, analysts in the US are worried about the impending "fiscal cliff" -- pending legislation that will trigger tax increases and spending cuts to balance the US budget deficit.
How's India likely to react? Well, the bankers will be pleased.
"Equity markets always prefer status quo over confusion — a win for Mitt Romney could trigger confusion," reports the Times of India.
"Secondly, Romney has already announced that if he wins Ben Barnanke, the current chairman of US Federal Reserve, will have to go. This could put the entire Quantitative Easing 3 (QE3) plan into question. QE3 allows bond buying of up to $40 billion per month, which, in turn, ensures liquidity in the global financial system and gives foreign institutional investors (FIIs) enough leeway to invest in India and a host of other countries," the paper cited industry experts as saying.
"If Romney wins, liquidity will dry up because that will put a question mark on the continuation of QE3," the paper quoted Arun Kejriwal, director, KRIS, an investment advisory firm, as saying.
"A win for Obama is a positive for the capital market as that would ensure flow of [foreign institutional investors'] money into India."
If that FII money does flow in, look for a jump in the Sensex -- which often tracks the flow of foreign cash. The benchmark index was up 100 points, or half a percent, in early trading on Wednesday.