Lok Sabha Elections 2024: Defense, government and industry among sectors to bet on ahead of election results

Stock Market Today: Benchmark Indices Nifty-50 Index and Sensex are trading close to Monday’s highs. Markets are taking into account political continuity, with the National Democratic Alliance led by the Bhartiya Janta Party regaining power in the ongoing general elections. However, the volatility index i.e. Nifty VIX is trading close to 24 and has risen sharply from the range of 10-14 in April. This is likely to increase even more as election results get closer.

Manish Sonthalia, chief investment officer at Emkay Investment Managers, says the market is factoring around 330 seats for the ruling party and any negative surprise could lead to a correction in the markets, while positive surprises could lead to a rally in the markets.

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However, for now, Emkay is maintaining its December 2024 Nifty target at 24,500 and also expects Nifty earnings to grow at 15-16%. This means Nifty could touch 26,500 in the next 18 months.

Among sectors, banking and financial services have seen valuation corrections, while public sector enterprises and industrials remain Sonthalia’s favourites. Investment-related themes will take hold in the energy sectors, while there will be a re-rating of public sector entities as some government entities will have an edge in sectors such as defense, oil marketing companies and energy financiers, according to Sonthalia. Industrial infrastructure and energy are other sectors that remain Sonthalia’s favorite sectors.

Even in the event of a correction, investors can accumulate shares with strong fundamentals, experts say.

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“The preferred bets may be high-quality, large-cap bets. Sectors like financial, automotive, capital goods, telecom and real estate are ideal for investment,” said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services* Investors should continue to invest and those who are optimistic about political stability can buy before the election results.

Some sectors to focus on include those that have been beneficiaries of production-linked incentive schemes, or PLI, which investors looking for policy continuity may want to consider.

Stocks in sectors such as large-scale electronics manufacturing, automobiles and automotive components, high-efficiency photovoltaic modules, Advance Chemistry Cell (ACC) batteries, electronics/technology products are some of the sectors that investors can consider as investment bets.

“We expect renewable energy, space technology, artificial intelligence, electric vehicles, semiconductor and chip manufacturing in addition to traditional infrastructure such as railways and highways to perform well,” said Feroze Azeez, deputy CEO of Anand Rathi Wealth

Disclaimer: The views and recommendations presented above are those of individual analysts or brokerage firms, not of Mint. We advise investors to seek the opinion of certified experts before making any investment decisions