BJP seat wins above 325 to trigger market rally, says PhillipCapital; stocks to buy

As Lok Sabha elections 2024 reach fag end, PhillipCapital said its base case remains 290-300 seats for BJP and 330-340 seats for NDA. If this pans out, the brokerage would maintain a positive near and long-term stance on equities, corporate earnings, and economy, assuming policy continuity and execution. A bullish scenario of 325-plus BJP seats and 360-plus NDA should result in a sharp rise in equities, the brokerage said on Wednesday.

"A bearish scenario – where the BJP does not secure a majority but the NDA forms a government under the leadership of Mr Narendra Modi as PM – this might lead to sharp sell-off in equities. Assuming a stable alliance for the next five years under the leadership of Mr Modi, we would recommend buying equities on steep correction. We do not see any chance of a non-NDA government coming to power," it said.

PhillipCapital said post its initial observations, the dip in voter turnout has been marginal and is unlikely to alter BJP’s expected re-election.

From a one-year point of view, it likes State Bank of India (SBI), Bank of Baroda (BOB), Canara Bank, PFC, REC, Shriram Finance, Muthoot Finance, UltraTech, Siemens, Hero MotoCorp, TVS Motor and Divi's Labs, among others.

Syngene, APL Apollo, Jindal SAW, IGL, Aarti Industries, Vinati Organics, Praj, Gokaldas Export and SP Apparel are its other stock picks from a one-year timeframe.

For a 2-3 year perspective, this brokerage prefers HDFC Bank, ICICI Bank, SBI, Kotak Mahindra Bank, Bajaj Finance, Sundaram Finance, MAS Financial, Infosys, HCL Tech, Persistent, KPIT Tech, Rategain, Reliance Industries, GAIL, Ambuja Cements, JK Cement and L&T.

Bharti Airtel, Sun Pharma, Divi's Labs, Syngene, Coal India, JSW Steel, Jindal Stainless, Maruti, Bharat Forge, Ashok Leyland, Concor, NCC, PNC Infra, Gateway Distriparks, SRF, Aarti Industries, Navin Flourine, PI Industries, Coromandel and Dhanuka Agritech are its other long-term picks.

PhillipCapital said INDIA alliance has largely united parties that were not a part of any alliance in 2019. This has not had any impact on the NDA coalition, except for minor changes in certain state parties. In 2019, the NDA coalition had 353 seats in parliament, which equals 349 seats as per current alliance. In its present form, the INDIA alliance holds higher seats at 131 against 88 in the 2019 elections.

"If this election’s outcome mirrors 2019’s, the NDA alliance can secure a maximum of 349 seats, unless there are any post-results alliances," PhillipCapital said.