BJP seat wins: Modi stock will watch as exit polls point to an upcoming rally in the stock market

Exit Polls 2024: With the BJP-led NDA likely to retain power with a clear majority of over 350, as suggested by various exit polls, analysts believe that ‘Modi stocks’ i.e. shares of defense companies, railways, bundled PSUs and capex-related sectors do very well on Monday, in the coming days. They believe that a BJP victory on June 4 will signal policy continuity and help government-backed sectors maintain high valuations.

Dhiraj Relli Dhiraj Relli, MD and CEO, HDFC Securities, said that the fact that the BJP may return to power favors the continuation and acceleration of the reform process. Relli said that if the NDA does not win more than 400 seats, it may be difficult to implement some fundamental reforms requiring constitutional amendments, but with such a majority there is still a lot that can be done.

Sector-wise, the major beneficiaries could be infrastructure, BFSI, capital goods, telecom, etc., but the upcoming budget will shed more light on the sectors that can lead the next rally, he said.

Kranthi Bathini, director, equity strategy, WealthMills Securities, expressed positive sentiment on railways and defense stocks. “PSU gains will be sustained and select stocks will continue to perform well. You can’t paint all PSU actions with one brush. We like defense and railways. There will also be more emphasis on energy stocks, but their valuations already include most of the positives.”

On Modi’s shares, Amar Ambani of YES Securities said: “I think they will rise in the next few days if the actual mandate is strong.”

Sharekhan in the note suggested a dozen short-term choices in case the NDA comes to power. The domestic broker includes Hindustan Aeronautics Ltd (HAL), Bharat Electronics (BEL), Mazagaon Dock Shipbuilders, Cochin Shipyard and BEML in the defense sectors. Among other companies, PSU prefers BPCL, HPCL, Coal India, NTPC and PFC.

In the private banking space, he likes ICICI Bank and IndusInd Bank; Mahindra & Mahindra Ltd, Escorts Ltd and Hero MotoCorp are the preferred products in the automotive sector.

Sharekhan likes Larsen & Toubro (L&T), PNC Infratech and Adani Ports in the infrastructure sector; ABB, Siemens, Thermax, Cummins and Kirloskar Engines and BHEL from the capital goods sector.

Among cement companies, he likes UltraTech Cement, JK Lakshmi Cement. It recognizes State Bank of India (SBI), Bank of Baroda, Bank of India and PNB as the top PSU banks. I prefer DLF, Sunteck Realty, Arvind Smartspaces
Other

Modi’s stock has been in the limelight recently after CLSA issued a note. The foreign brokerage house, in its report, identified 54 out of 183 liquid companies that are seen as direct beneficiaries of the Modi government’s current policies. Half of them were PSU shares.

Within Modi’s share basket, ONGC, NTPC, NHPC, SBI, Power Finance, IGL and Mahanagar Gas were preferred buys in the PSU space. “Among Modi’s non-PSU stocks, CLSA analysts like Ashok Leyland, Ultratech, L&T and telecom stocks linked to tariff hikes via Bharti Airtel, Indus Towers and Reliance,” he noted.