BJP seat wins, Sensex & Nifty targets: Stocks, sectors to watch if PM Modi is re-elected

Indian equity markets have been witnessing volatility led by the outcome of general elections 2024, which will be declared on Tuesday, June 4. Participants of BT Markets election survey are baking in a clear victory for the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA), where they see it bagging 300-350 seats in the Lok Sabha elections.
 

Amid the electoral mercury heading towards its peak, market expectations are mostly expecting the current government to come back to power with a comfortable majority and believe that markets have already priced in BJP's victory. However, if the current government fails the majority, then we may see some knee jerk negative reaction, they said.
 

Amnish Aggarwal, Head of Institutional Research at Prabhudas Lilladher (PL) said that the market is pricing in about 300 seats for the NDA. Policy continuity will be a big confidence boost for investors. "We are not really factoring in extreme scenarios for the most part because they don’t seem likely," he said.
 

For conversation’s sake, if the BJP comes in with a thumping majority, there is more reason for a very positive reaction by the market, primarily due to the confidence that a continuation of policies will instill in investor sentiments. In anticipation of these factors, PL has raised the 12-month target on Nifty 50 to 25,810 from 25,363, he said.
 

Arpit Jain, Joint MD, Arihant Capital Markets anticipates Nifty to reach 24,000 levels in the near term if BJP gets a thumping victory, while he expects the benchmark index to correct to 20,500 levels, if it fails to gain a majority. He projects a potential 7-8 per cent move in the index in the extreme cases, which may lead to some profit booking or correction.
 

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities expects the BJP led NDA to win around 300-320 seats. It seems that the majority of the market participants too are going with this number, he said.
 

If the Modi government secures a significant majority, it is possible that the Nifty could aim for 24,200 and the Sensex could reach around 78,500, said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.
 

"In a possible scenario resembling the 2019 election results, the Nifty could potentially reach 23,500 while the Sensex may hover around 77,000. If a coalition government with the NDA comes to fruition, it is projected that the Sensex could potentially reach 72,000, while the Nifty could aim for 22,000," he said.
 

BJP had given a slogan of 'Abki baar, 400 paar' which aimed to win more than 400 seats for its pan India alliance named NDA, while BJP itself eyed 370-seat mark in Lok Sabha. However, the lower turnout in early phases and strategic moves of INDI Alliance can keep the numbers in check, around the previous general elections, expects the market analysts.
 

Commenting on pledge of 400 plus seats of BJP, Nikunj Saraf, Vice President, Choice Wealth said that the target will not be a piece of Cake for NDA as the anti-incumbency has built in the last 10 years which might affect its prospects carrying NDA touching or marginally cross its last numbers will be a good unbiased judgement we can expect.
 

"Market seems to have discounted the same as we rallied greatly in the last 6 months, but since we are coming up close to completion of election and results, we can see volatility spiking up," he said.
 

Market experts believe that a clear win for the BJP-led NDA government will mean continuation of the current economic policy with more reforms coming in. They are positive on buzzing sectors and stocks with more focus on spending on the capital expenditure and infrastructure for all-round economic growth.
 

"The BJP led government has focused on capital expenditure in its last tenure. This has helped companies from sectors like Railways, defense, engineering and capital goods. These sectors should be on investors' radar if BJP returns to power," added Sheth from SAMCO Securities.
 

If the BJP wins over 272 seats and PM Modi retains the premiership, the market is expected to react positively, particularly if the NDA gets close to 400 seats. Domestic sectors like financials, consumer discretionary, industrials/infrastructure and PSUs are likely to outperform, said Saraf from Choice Broking.
 

Jain from Arihant Capital suggested investors to look sector-specific opportunities in PSU, railways, defense, agriculture, and manufacturing MNCs. These sectors are likely to benefit if a BJP government is formed for the third time. "It is, however, advisable to buy in tranches," he said.
 

Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers believes overall domestic based sectors should largely continue to perform if the BJP-led government is formed for the third time. He is positive on manufacturing, defense, infra, railways, EV, EMS, PSUs, financials and consumer to keep pace with economy growth.
 

PL has picked L&T, Adani Port, Road & Metro EPC companies from Infra space; Siemens, ABB, Carborundum, Schneider, ESAB, Ingersoll Rand, Kirloskar Pneumatic from Capital Goods space; HAL, BEL, BDL, BEML, Mazagon Dock, Cochin Shipyard from Defence space; Ultratech and Ambuja Cement from Cement space.