According to the exit polls, the National Democratic Alliance (NDA) is expected to get over 350 seats out of the 542 seats contested during the seven-phase election which spanned over 48 days. One constituency did not go for election as the Surat seat went to BJP unopposed.
While exit polls are estimates, the counting of votes will take place on June 4, Tuesday.
ETMarkets analysed sectors that may see traction when markets resume trading on Monday.
PSU stocks across sectors are expected to remain in focus in the run-up to the result date and even after it. Counters in defence, railway, public sector banks (PSBs) may see a sharp upturn. Ever since voting for the Lok Sabha election began, the market capitalisation of BSE PSU index has increased by nearly Rs 7 lakh crore with stocks of state-owned entities, now being categorised as “Modi stocks”, rallying up to 87%.PSU stocks have been the key beneficiaries of PM Modi’s ‘Aatmanirbhar Bharat’ policy and are dominating the list of election season winners.Defence
Defence stocks have been in top form with several of them from public and private spaces delivering multibagger returns.
State-run companies like Cochin Shipyard, Bharat Heavy Electricals (BHEL), Bharat Electronics (BEL), Hindustan Aeronautics (HAL), Garden Reach Shipbuilders, Bharat Dynamics and Zen Technologies have given multibagger returns between 266% and 160% in the last one year.
Select private ones have also not been without action. While Zen Technologies and Astra Microwave Products have yielded returns of 150% or more, the flagship Kalyani Group company Bharat Forge has returned 96% during this period. Data Patterns has earned 73% returns.
But the anticipation is already building up. Mark Matthews, Managing Director at Julius Baer sees the Indian defense sector as a top beneficiary from the Modi 3.0 regime. In his view, the sector “conceptually” made excellent sense with India emerging as a manufacturing power. Defence remains part of the scheme and it will be a place in the midcaps where market will see continuity in the outperformance, Matthews argued as he sees big demand for defence-related material in the world, going ahead.
“I do not see that changing. And I see India as a very competitive player on a global scale. So, it has the potential to capture a large share of the international market as well,” the Julius Baer MD said.
Railways
Railways is another sector which has been running on a fast track. Not just the government-owned railway company stocks, but their private peers have also delivered multibagger returns. Rail Vikas Nigam Limited (RVNL), BEML, Indian Railway Finance Corporation (IRFC), RITES, Titagarh, Jupiter have yielded between 454% and 192% returns.
On the back of strong order books, they have delivered robust quarterly results.
BFSI
Manish Sonthalia, Chief Investment Officer, Emkay Investment Managers expects BFSI to do well along with PSUs and industrials.
“BFSI has led the earnings growth and seen a correction in valuation. Investment-related themes will come into play with power capex building up in the next 3 to 5 years. We are re-rating public sector units as some of the government entities will have an advantage in sectors such as defence, oil marketing companies and power financers,” said Sonthalia, Chief Investment Officer at Emkay Investment Managers.
Infra/Consumer discretionary
Domestic sectors particularly financials, consumer discretionary, industrials/infrastructure and PSUs to outperform, Japanese brokerage Nomura said.
Modi Stocks
Hong Kong-based CLSA has identified 54 stocks that it feels will do the trick in the Modi 3.0 government. About 90% of these 54 Modi stocks have outperformed Nifty in the last 6 months. Despite coming from varied sectors, all of the 27 PSU stocks from the F&O space have beaten Nifty over the last six months.
“Of the 27 non-PSU Modi stocks, all stocks have outperformed Nifty over this period other than five cement companies. This underscores that price action in the last six months has been singularly dominated by this election theme,” CLSA said.
These stocks are HAL, Hindustan Copper, NALCO, Bharat Electronics, Cummins India, Siemens, ABB India, Indus Towers, SAIL, BHEL, Dixon, Adani Ports, REC, PNB, Tata Power, HPCL, GAIL, JSPL, InterGlobe Aviation, IRCTC, PFC, IOCL, BPCL, Petronet LNG, Power Grid Corporation, SBI, GMR Airports, NMDC, Canara Bank, Ambuja Cements, ONGC, Coal India, Container Corporation of India, NTPC, Bharat Forge, Bharti Airtel, Indian Hotels, ACC, Adani Enterprises, Bank of Baroda, Polycab, Gujarat Gas, MGL, Ashok Leyland, Reliance Industries, L&T, IGL, UltraTech Cement, Vodafone Idea, JK Cement, Shree Cement, The India Cements, Dalmia Bharat and The Ramco Cements.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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