Sat. Jul 13th, 2024

Dalal Street Buzzes with ‘Modi Stocks’ as BJP Eyes Election Victory

s the Lok Sabha elections draw near, investors on Dalal Street are abuzz with excitement over a new category of stocks dubbed ‘Modi stocks.’ These stocks, identified by brokerage firm CLSA, are poised to benefit significantly if the BJP-led NDA government secures a strong mandate in the upcoming elections.

CLSA has highlighted 54 ‘Modi stocks’ within the F&O universe of 183 liquid names, which are expected to gain substantially if Prime Minister Narendra Modi’s party wins a substantial number of seats. This list includes prominent public sector undertakings (PSUs) and private sector giants that are likely to thrive under Modi’s economic policies.

Prominent names among these stocks include Larsen & Toubro (L&T), NTPC, NHPC, Power Finance Corporation (PFC), Oil and Natural Gas Corporation (ONGC), Indraprastha Gas Limited (IGL), Mahanagar Gas, Bharti Airtel, Indus Towers, and Reliance Industries (RIL). According to CLSA, a remarkable 90% of these ‘Modi stocks’ have outperformed the Nifty in the election rally over the past six months, compared to just 42% of other companies.

The optimism surrounding a BJP victory is palpable, with investors expecting the party to secure around 300 seats in the Lok Sabha elections, the results of which are to be declared on June 4. A strong mandate for the BJP is anticipated to lead to increased infrastructure spending, benefiting sectors such as industrials, capital goods, utilities, defense, cement, and real estate.

However, CLSA cautions that this narrow, election-focused rally may taper off by June-July. The brokerage firm suggests that banks offer the best risk-reward proposition for India’s growth in the second half of fiscal year 2025. Among their top picks in the banking sector are HDFC Bank, ICICI Bank, Axis Bank, and IndusInd Bank.

Manish Sonthalia, Chief Investment Officer at Emkay Investment Managers, recently expressed bullish sentiment towards several sectors, including banking and financial services, power producers and financiers, defense, and major oil marketing companies. He noted that the benchmark Nifty50 could rise by 7% this year irrespective of the election outcome, driven by strong earnings momentum and increased investments.

As the Lok Sabha elections approach, the focus on ‘Modi stocks’ reflects investor confidence in a BJP-led government continuing its economic policies. The outcome of the elections will play a crucial role in shaping market trends and investment strategies in the coming months.

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