Exit polls 2024: With BJP-led NDA likely to retain power with a strong 350-plus majority, as suggested by various exit polls, analysts believe 'Modi stocks' namely shares from defence, railways, PSUs as a pack and capex-linked sectors may do well, on Monday and days to come. A BJP win on June 4, they said, would signal policy continuity and help sectors being supported by government to sustain high valuations.
Dhiraj Relli Dhiraj Relli, MD & CEO at HDFC Securities said the fact that BJP could return to power is good for continuing and accelerating the reform process. Relli said if the NDA does not get 400-plus seats, some fundamental reforms requiring constitutional amendments may be challenging to implement, but there is still a lot that can be done with this kind of majority.
Sectorally, he believes infrastructure, BFSI, capital goods, telecom, etc, could be the key beneficiaries, but the forthcoming Budget will throw more light on sectors that could lead the next rally, he said.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said he is positive on railways and defence stocks. "PSU gains will be sustained, and selective stocks will continue do well. One can't paint all PSU stocks with same brush. We like defence and railways. Power stocks will also be in greater focus but their valuations are already factoring in most positives."
On Modi stocks, Amar Ambani of YES Securities said: "I think they will rise in the next few days, if the actual mandate is a strong one."
Sharekhan in a note suggested dozen of short-term picks in case NDA comes to power. The domestic brokerage likes Hindustan Aeronautics Ltd (HAL), Bharat Electronics (BEL), Mazagaon Dock Shipbuilders, Cochin Shipyard and BEML from defence sectors. Among other PSU stocks, it prefers BPCL, HPCL, Coal India, NTPC and PFC.
In the private banking space, it likes ICICI Bank and IndusInd Bank; Mahindra & Mahindra Ltd, Escorts Ltd and Hero MotoCorp are its preferred picks from automobile sector.
Sharekhan likes Larsen & Toubro (L&T), PNC Infratech and Adani Ports from infrastructure sector; ABB, Siemens, Thermax, Cummins and Kirloskar Engines and BHEL from capital goods sector.
Among cement stocks, it likes UltraTech Cement, JK Lakshmi Cement. It sees State Bank of India (SBI), Bank of Baroda, Bank of India and PNB as top picks among PSU banks. It prefers DLF, Sunteck Realty, Arvind Smartspaces Other
Modi stocks was recently in focus after CLSA came out with a note. In its report, the foreign brokerage identified 54 out of 183 liquid stocks, which are perceived as direct beneficiaries of the Modi government's current policies. Half of them were PSU shares.
Within the basket of Modi stocks, its preferred buys were ONGC, NTPC, NHPC, SBI, Power Finance, IGL and Mahanagar Gas in the PSU space. "Of the non-PSU Modi stocks, CLSA analysts like Ashok Leyland, Ultratech, L&T and the tariff-hike-linked telecom stocks via Bharti Airtel, Indus Towers and Reliance," it noted.