We are now in the week where USA will go for vote and elect their new president. Everyone in the market are bit nervous after BREXIT results and believe there is a good chance of Donald Trump to win the election.

We at Valueoperations had thought a lot about the implication of Trumps victory but conclude that there is no need for adding hedges or taking money off the table.

Our logic says, there is a 30% chance Trump will win at polls, a 50% chance he sticks to its ideological platform and a 20% chance he gets his policies through congress.

The first order of thinking is to say there is a chance Trump becomes president and he starts a global trade war. You have to think about the probability of Trump being president or not, which today is 30%. It’s insufficient to say ipso facto there’s a 30% chance of a global recession.

Let me give you example, if US economy worsen then US dollar will fall down. But the US currency has reserve status, and if the rules of the global trade were to be rewritten, emerging markets currencies would be worse off, triggering a capital flight that favours the big dollar.

As an active investor in the Indian market, if this situation arises, how will RBI or India can stop this flight or protect Indian rupee?

So how should we play the market this week?

It is difficult to answer this question. But let us start thinking worse scenarios, if the equity market plunged, you can bet that Janet Yellen will announce some emergency QE (quantitative easing) measures and the market will go vertical.

Valueoperations will use any volatility to “pounce” on new positions. We know exactly what we want to buy and where we want to buy it.

Indian investors will have the opportunity to trade the outcome in real time on Wednesday. By 5:30 AM in the morning, polling station on the east coast will be closed including Florida, and New Hampshire. By 9:30 AM all the media and network outlets could start calling the results in the absence of a close race.

Greg Goodsell, global equity strategist at boutique 4D infrastructure, believes that the same forces that drove BREXIT are behind the Trump phenomenon.

“That is there’s this sense in the community that there are people who haven’t benefited from free trade and globalisation, and have been left behind. It’s the states in the middle of the USA they call the ‘rustbelts’, where manufacturing jobs have been lost to international competition,” he explained. “It’s these voters who will support Trump. The same type of voters voted for Brexit, as UK jobs had been lost to the open market with the EU.”

Mr Goodsell refers to the inward-looking Trump platform as “a Fortress USA – type approach.”

“If you thought Brexit was a big event, the UK is 2 [per cent]-3 per cent of global GDP. The US is around 25 per cent of global GDP,” he said. “What does that mean for stocks? Stocks in the US that are big exporters, if they get caught up in global trade wars, they would likely suffer. “The flipside might be for purely domestically focused US companies, they’re probably going to be less adversely impacted. If he brings in the type pf policies he’s talking about, protectionism will be much more common around the world, but the US domestic economy could remain quite robust as local businesses move to fill an import replacement role.”

The S&P 500’s record high of 2190.15 points came on August 15; it has sold off by only 5% since then, but sharply in the late past week.

In early August Trump was on track of heavy loss at the hands of Hillary Clinton. By September, Democrats started getting nervous that Trump’s appeal was bigger than feared. That came in wake of leaked emails alluding to links between the Clinton Foundation and Democratic nominee’s time as secretary of state. But FBI had given a green chit to Hillary Clinton and we see almost a jump in S&P futures and markets in the USA are expected to open strong on their Monday morning trade.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we tell you to take professional advice before going ahead with our views.