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25 stocks that JPMorgan likes; F&O strategy, Nifty historical returns post elections & more

25 stocks that JPMorgan likes; F&O strategy, Nifty historical returns post elections & more

ICICI Bank Ltd, Kotak Mahindra Bank Ltd, State Bank of India, Bank of Baroda, LIC Housing Finance Ltd, Shriram Finance Ltd, HDFC AMC, ICICI Prudential Life and ICICI Lombard are some of the financial stocks that JPM likes.

Amit Mudgill
Amit Mudgill
  • Updated Jun 5, 2024 10:25 AM IST
25 stocks that JPMorgan likes; F&O strategy, Nifty historical returns post elections & moreStocks to watch: JPM prefers Godrej Properties and Prestige Estates. JPMorgan also has liking for healthcare stocks such as Mankind Pharma, Abbott India, Sun Pharma, Max Healthcare and Rainbow Hospitals.

Foreign brokerage JPMorgan believes the BJP-led NDA would likely form the next government and that stock investors should now focus on the government’s initial policy priorities to be announced over the next few months. While the broking firm would undertake a more detailed assessment of its sectoral calls once the new administration is constituted and the near-term policy priorities are announced, it is overweight on financials, real estate and healthcare stocks for now.

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Stocks to watch
Among financial stocks, JPMorgan likes ICICI Bank Ltd, Kotak Mahindra Bank Ltd, State Bank of India, Bank of Baroda, LIC Housing Finance Ltd, Shriram Finance Ltd, HDFC AMC, ICICI Prudential Life and ICICI Lombard. It also likes auto stocks such as Bajaj Auto Ltd, Mahindra & Mahindra Ltd, Ashok Leyland Ltd, Exide Industries Ltd and Samvardhana Motherson Ltd.

Among real estate stocks, it prefers Godrej Properties and Prestige Estates. JPMorgan also has liking for healthcare stocks such as Mankind Pharma, Abbott India, Sun Pharma, Max Healthcare and Rainbow Hospitals. It likes selective consumer names such as Hindustan Unilever, Dabur India, Colgate-Palmolive and Nestle India. The brokerage is underweight on IT and materials sector.

Market returns, volatility  
Following the surge in volatility due to BJP's narrower-than-expected lead, the India VIX index reached 26.7 level on June 4 aligning more closely with levels observed on past election result days.

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JPMorgan said it typically takes about one week for implied volatility to revert to pre-election levels."We anticipate that implied volatility in Indian equities will normalise. The degree and speed of this normalization will largely depend on the participation of foreign investors. With the election behind us, the Indian equity market is likely to resume its long-standing upward trend. We recommend positioning for potential spot-up and volatility-down scenarios by buying Nifty call spreads funded by selling puts," it said.

MKT

Historically, the Nifty has delivered 9 per cent return in three and 8 per cent return in the six months post general elections since 1991, showing that in the past a correction or dip has typically ended up as a buying opportunity over the longer term, JPMorgan with a Nifty year-end target of 22,000 said. 

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F&O strategy
JPMorgan recommended traders consider building long positions to position for a potential uptrend in the Nifty. It's preferred strategy is to buy Nifty 27 Jun 2024 23,000-24,000 Call spread funded by selling 27 Jun 2024 20,000 Put on the Nifty index. 

"This preference is based on our expectation that implied volatility will further normalize in the coming days, which benefits the mark-to-market performance of the proposed call spread collar," it said.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jun 5, 2024 10:23 AM IST
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