TCS to Tata Motors: How Donald Trump’s second term could shape THESE Tata Group stocks?

At this point, investors worldwide are focused on Donald Trump’s return to the White House. President-elect Donald Trump and Vice President-elect JD Vance will assume office on Monday, January 20.

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Trump’s aggressive stance on imposing higher tariffs on countries like India and his intent to reassess visa regulations signals that his return as US President could lead to significant changes in the world’s largest economy’s trade policies.

From a global perspective, Trump’s emphasis on ‘Make America Great Again’ could mean he will extend his first-term agenda of encouraging American companies to boost domestic manufacturing while taking steps to reduce outsourcing.

From India’s perspective, Trump’s policies are expected to significantly impact sectors such as IT, pharma, and commodity-linked sectors such as automobiles.

Trump’s policies to impact stocks like TCS, Tata Motors

Two major stocks of the Tata Group- TCS and Tata Motors- could be significantly impacted by Trump’s policies as they have a significant presence in the US market.

The H-1B visa rules could be important for an IT company like TCS. In his first term, Trump attempted to curb the H-1B visa programme. His policies increased H-1B rejection rates, H-1B/L-1 visa processing charges and wage inflation for H-1B resources.

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However, companies like TCS look better placed as, over the years, it has built local delivery capabilities and hired locals in the US.

“Indian IT services players, including TCS, have built local delivery capabilities in the US, hired locals and diversified their client portfolio by going beyond North America,” Deepak Jasani, the head of retail research at HDFC Securities, observed.

However, Jasani underscored that negative announcements on the H-1B visa front could impact the valuations of IT service companies due to the perceived reduced competitiveness in bidding for and executing contracts in the US.

Another factor is that if Trump proposes a cut in corporate taxes, US companies could use part of the savings for IT upgrades. Jasani believes if this happens, it could open new business avenues for Indian IT service companies, including TCS.

Apurva Sheth, the head of market perspectives and research at SAMCO Securities, pointed out that Trump’s ‘ tariff and immigration policies could have significant implications for India’s leading IT companies, such as TCS, which derive a significant portion of revenue from the US market.

Potential restrictions on H-1B visas may increase talent acquisition costs and necessitate higher local hiring, impacting margins.

However, Sheth said TCS’s strong fundamentals, diversified client base, and ongoing investments in innovation and automation position it to adapt to policy changes.

“While short-term challenges may arise, the IT sector’s inherent adaptability and sustained demand for technology solutions position companies like TCS for steady long-term growth,” said Sheth.

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For Tata Motors, high tariffs on US imports could be the key.

As Jasani pointed out, if Trump follows up on his threat to impose a tariff on all US imports of goods imported from Europe, then JLR exports from Europe to the US could be impacted, hurting Tata Motors. On the other hand, if tariffs are imposed only on imports from China, JLR exports to the US could become more competitive, giving Tata Motors a minor benefit.

According to Sheth, the increase in costs for competitors’ products could benefit JLR, a subsidiary of Tata Motors, which has a significant presence in the North American region, including the US.

However, Sheth underscored that JLR’s ability to increase market share in the US depends on Americans shifting from affordable to premium vehicles, which remains JLR’s primary focus.

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