As various exit polls suggest a strong likelihood of the BJP-led NDA retaining power with a robust 350-plus majority in the 2024 Lok Sabha elections, analysts foresee a bullish trend in ‘Modi stocks’. These stocks, encompassing shares from defense, railways, PSUs, and capex-linked sectors, are anticipated to witness a surge in the coming days.
Dhiraj Relli, MD & CEO at HDFC Securities, expressed optimism about the potential return of the BJP to power, noting it as favorable for continuing and expediting the reform process. However, he highlighted that if the NDA falls short of the 400-plus seats, certain fundamental reforms requiring constitutional amendments might face challenges. Nevertheless, he emphasized that substantial progress could still be made with this level of majority.
Sectorally, experts anticipate infrastructure, BFSI (Banking, Financial Services, and Insurance), capital goods, and telecom sectors to be primary beneficiaries of a BJP victory. Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, particularly favors railways and defense stocks, anticipating sustained gains in PSU stocks as well.
Amar Ambani of YES Securities echoed the sentiment, predicting a rise in ‘Modi stocks’ in the upcoming days, contingent upon a strong electoral mandate for the NDA.
Sharekhan, in a recent note, recommended a set of short-term picks in anticipation of an NDA victory. These include Hindustan Aeronautics Ltd (HAL), Bharat Electronics (BEL), Mazagaon Dock Shipbuilders, Cochin Shipyard, and BEML from the defense sectors. In addition, the brokerage favors PSU stocks like BPCL, HPCL, Coal India, NTPC, and PFC.
Within the private banking space, Sharekhan shows preference for ICICI Bank and IndusInd Bank, while Mahindra & Mahindra Ltd, Escorts Ltd, and Hero MotoCorp are favored picks from the automobile sector.
In the infrastructure segment, stocks such as Larsen & Toubro (L&T), PNC Infratech, and Adani Ports are highlighted, along with ABB, Siemens, Thermax, Cummins, Kirloskar Engines, and BHEL from the capital goods sector.
The recent spotlight on ‘Modi stocks’ was intensified by a note from CLSA, identifying 54 out of 183 liquid stocks as direct beneficiaries of the Modi government’s policies. Among these, half were PSU shares. CLSA’s preferred buys include ONGC, NTPC, NHPC, SBI, Power Finance, IGL, and Mahanagar Gas from the PSU space, alongside non-PSU stocks like Ashok Leyland, Ultratech, L&T, and tariff-hike-linked telecom stocks via Bharti Airtel, Indus Towers, and Reliance.
As investors eagerly await the official election results on June 4, 2024, the market sentiment remains cautiously optimistic, with expectations of policy continuity under a potential BJP-led NDA government.”
