US Midterms Likely Shape Indian Markets via Oil, Dollar and Yields, Not Direct Policy

November 2026 US midterm elections are set to influence Indian equities mainly via changes in crude oil prices, the US dollar and Treasury yields, rather than a direct shift in US‑India policy. Emkay Global Financial Services expects trade and immigration frictions to continue even if Democrats take control of Congress, because President Donald Trump retains strong executive powers over tariffs and immigration. The brokerage sees three likely outcomes: Democrats winning both chambers, Democrats winning the House while Republicans keep the Senate, or Republicans holding both chambers. A Democratic win would increase scrutiny of Trump’s tariff moves but is unlikely to ease existing trade tensions. Emkay warns that a post‑election flare‑up in the Iran conflict could push Brent crude up sharply, hurting India’s balance of payments, the rupee and the Sensex and Nifty. Conversely, a softer dollar, lower US two‑year yields (about 120 basis points above current levels) and falling oil would support Indian markets. Current conditions already differ from past cycles: the S&P 500 is about 12 % higher than six months ago, two‑year and 10‑year yields sit roughly 120 and 100 basis points higher, and Brent has risen about 61 % since the last cycle. Historical data show average S&P gains of 6 % in the first 60 trading days after midterms, 12 % in 120 days and 17 % in 180 days, but Emkay says tighter valuations and higher yields limit the likelihood of a repeat. ## Context India’s market sensitivity to oil, the dollar and US yields reflects its large import bill and reliance on foreign capital. Geopolitical tension in the Middle East routinely spikes oil prices, which directly strains the rupee and equity valuations.