India emerges as key emerging market following US midterm elections: Shriram Research report

India has emerged as a standout emerging market following the US midterm election results, according to a report by Shriram Research. Following the elections, the Nifty advanced 6.8 percent, while the Hang Seng gained 4.7 percent. Additionally, the Indian rupee appreciated by 1.1 percent to close at 93.81 against the US dollar on November 6, marking one of the strongest currency movements among emerging markets.

The market performance was largely driven by a decline in crude oil prices and a rotation of capital away from AI-linked stocks in the US, South Korea, and Taiwan toward Chinese and Indian equities, which have lower exposure to AI hardware. Between November 2 and November 6, the Nasdaq 100 declined 3.6 percent, while South Korea's KOSPI and Taiwan's TAIEX fell 13.6 percent and 11.6 percent, respectively. Furthermore, India's two-year government bond yield declined by 17.1 basis points, and the 10-year yield fell 12.5 basis points by the November 6 close.

Despite these positive market movements, Shriram Research noted that India's market gains remain dependent on de-escalation between the US and Iran, as crude oil prices recovered after an initial post-election decline. The report also observed that the Democratic Party's victory in both chambers of the US Congress could increase political and congressional gridlock rather than prompt an immediate policy reversal, given that the Senate filibuster and presidential veto remain constraints.

Beyond macroeconomic indicators, the report highlighted potential opportunities for India's data centre industry stemming from concerns over potential restrictions on data centre development in the US. With moratorium risks emerging in Texas and Georgia following the Democratic Party's victories, global hyperscalers may look to diversify their investments away from the US.

India's data centre capacity is projected to increase about fivefold to 7.5 GW by 2030, involving an estimated investment of around $36 billion. The report identified several factors that could help India secure these redirected investments, including a tax holiday, relatively cheap power, engineering talent, and government efforts to attract hyperscalers.

"The recent capital rotation toward emerging markets like India highlights the evolving nature of global macroeconomic trends. For the Indian business and startup ecosystem, the projected expansion in data centre infrastructure presents a tangible growth avenue. As global hyperscalers look to diversify investments due to regulatory shifts in the US, India's engineering talent, tax incentives, and competitive power costs position the nation well to attract substantial long-term capital in the technology infrastructure sector." — Dr. Shishir Gupta, Founder & CEO, StartupLanes