The BJP’s victory in the Lok Sabha Elections is expected to boost “Modi Stocks”: CLSA Report
The global brokerage firm CLSA has identified a set of companies that stand to gain a lot in the event that Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) wins the 2024 Lok Sabha elections. Known as “Modi stocks,” these equities have already surpassed the Nifty and are predicted to rise further, especially if the current administration wins a solid majority again.
PSUs, or public sector undertakings, are the main beneficiaries.
The majority of the 54 stocks that have been identified are public sector undertakings (PSUs) that are engaged in infrastructure-related and capital expenditure industries. Among them are well-known businesses like Mahanagar Gas, PFC, ONGC, NTPC, NHPC, L&T, and IGL. According to CLSA, these equities have increased in value in anticipation of a BJP win and are probably going to keep rising until June or July, following patterns seen in past election cycles where PSUs saw increases following the results of the vote.
Players in the Financial Sector
PSUs are not the only big banks that are on CLSA’s list of possible beneficiaries. Growth is anticipated for HDFC Bank, ICICI Bank, Axis Bank, and IndusInd Bank should the current government continue in office. These financial firms are anticipated to benefit from a stable and continuing set of policies, which will raise the value of their stock.
Greater Market Impact
The election outcomes are anticipated to benefit other notable corporations in addition to PSUs and banks. Ashok Leyland, UltraTech, Bajaj Finance, Max Financials, Zomato, and DMart are a few of these. The telecom industry is also well-represented; CLSA has highlighted Bharti Airtel, Indus Towers, and Reliance Industries.
Election-Sensitive Rally
Ninety percent of these “Modi stocks” have already surpassed the Nifty in price during the last six months, according to CLSA. The trading business believes that this tendency will continue because of the hope that the BJP may win. Nevertheless, CLSA cautions that by mid-2024, the rise would become more narrow and possibly taper off. After the election, investors may have a “reality check” because many optimistic expectations have already been factored into these companies, which could encourage less patient investors to take profits.
Calculated Timing
According to CLSA’s prediction, PSU stock prices could reach their peak in June or July, right before the new government’s budget is presented. Given that it fits with historical patterns found in past elections, this time is regarded as crucial.
In Summary
There is a positive attitude surrounding certain stocks because of the expectation that the BJP will win the next Lok Sabha elections. This includes PSUs and important financial and infrastructure-related enterprises. Even though there is a lot of room for growth in this election-related surge, investors should be wary of the possibility of a market drop when the first frenzy passes.
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