The Indian stock market is bracing for strong gains as exit polls predict a significant victory for the BJP-led NDA in the upcoming elections. With projections suggesting over 350 seats for the ruling coalition, market experts are optimistic about the prospects of a Modi 3.0 government, expecting policy continuity and increased capital expenditure to drive sector-specific growth.
Motilal Oswal Financial Services has identified several large-cap stocks poised to benefit from this anticipated political stability. Among their top picks are SBI, L&T, ICICI Bank Ltd, Mahindra & Mahindra Ltd, Coal India, ABB India, Adani Ports, Hindalco Industries, and HPCL. These stocks are expected to see positive momentum as investors align their portfolios with the anticipated government policies.
The capital goods sector, particularly railways and defense, is highlighted as a major beneficiary. Analysts are positive about stocks like ABB Ltd, Siemens Ltd, Thermax Ltd, Cummins, and Kirloskar Engines, citing the government’s focus on infrastructure development. BHEL is also favored within this sector. The defense sector, in particular, is expected to see sustained gains, with selective PSU stocks continuing to perform well under a stable government.
Infrastructure stocks are also in the spotlight. Sharekhan, in a note ahead of the exit polls, expressed a preference for PNC Infratech, Adani Ports, and L&T, anticipating that these companies will benefit from increased government spending on infrastructure projects. This aligns with the broader market sentiment that infrastructure development will be a key focus area for the new government.
Real estate stocks are another area of interest. Sunteck Realty, DLF, and Arvind Smartspaces are among the top picks in this sector. With the government’s push for housing development, these stocks are expected to see significant gains. The real estate sector’s growth prospects are further bolstered by expected policy measures aimed at boosting housing infrastructure.
The banking sector, particularly PSU banks, is also expected to benefit from the anticipated political stability. MOFSL remains overweight on financials, with SBI, Bank of Baroda, Punjab National Bank, and Bank of India being their preferred picks. These banks are expected to gain from increased government initiatives aimed at financial inclusion and infrastructure financing.
Midcap stocks are not left out of this positive outlook. MOFSL has identified several midcap stocks that are likely to benefit from sector-specific growth. These include Indian Hotels, Global Health, Godrej Properties, KEI Industries, PNB Housing, Cello World, and Kirloskar Oil. These stocks are expected to see significant gains as they align with the government’s targeted initiatives.
Kranthi Bathini (Director of Equity Strategy at WealthMills Securities) expressed optimism about railways and defence stocks, stating that selective PSU stocks in these sectors would continue to perform well. He also noted that power stocks would be in greater focus, although their current valuations might already reflect much of the anticipated positives.
Foreign brokerage CLSA recently released a strategy note identifying 54 out of 183 liquid stocks as direct beneficiaries of the Modi government’s policies. Half of these were PSU shares. Among their preferred buys in the PSU space are ONGC, NTPC, NHPC, SBI, Power Finance, IGL, and Mahanagar Gas. For non-PSU stocks, they favor Ashok Leyland, UltraTech, L&T, and tariff-hike-linked telecom stocks like Bharti Airtel, Indus Towers, and Reliance.
Disclaimer –The information provided in this article is for informational purposes only and does not constitute financial advice. The predictions and stock picks mentioned are based on current market sentiment and expert opinions, and are subject to change based on actual election results and market conditions. Investors are advised to conduct their own research and consult with a financial advisor before making any investment decisions. The author and publication are not responsible for any financial losses or gains resulting from investment actions based on this article.
