Lok Sabha Elections: Top sectors to watch if Modi returns as Prime Minister

Updated May 31, 2024, 12:42 PM CEST

The stock market is currently overbought and price levels are certain to correct regardless of continuity or change of government.

Lok Sabha elections the results will be announced on Tuesday, June 4, 2024. A seven-day general election was held from April 19 to June 1, with political parties competing across the length and breadth of each other, a beautiful example of India’s vibrant democracy. Meanwhile, while political parties, candidates and the general public are waiting for the election results, the stock market was waiting for D-Day with equal impatience. During the seven-day elections, markets experienced significant volatility, including a historic rise in the India VIX index, a fear gauge due to possible scenarios of a full majority for the NDA, victory of a hung parliament or the INDIA bloc. They were recommended by many brokerage houses – both global and domestic, as well as analysts sector shares or top stocks that will remain in the spotlight if India sees Modi 3.0 and policy continuation.

Times Now Digital spoke to VLA Ambala, SEBI Registered Research Analyst and Co-Founder of SMT, who gave a detailed analysis of the top sectoral stocks that will remain in the spotlight if Modi returns as Prime Minister. She explained that historically, if a ruling party is re-elected to power for a second term, the broader stock market usually responds positively because investors see it as a sign of policy stability and continuity. However, the market does not welcome the continuation of the third term.

Top Sector Stocks to BUY

The stock market is currently overbought and price levels are certain to correct regardless of continuity or change of government. “In this regard and based on sectoral performance, I am bullish on the PSUs, Utilities, IT, Pharmaceuticals, Metals and Green Energy sectors as well as key sectors such as infrastructure,” Ambala added.

She believes these sectors could remain in the spotlight for years to come, regardless of which party takes power, and could offer lucrative opportunities for traders and investors alike. Additionally, each sector has shown continued bullish trends and is likely to outperform the broader market.

Individuals would benefit from investing in high-quality stocks and avoiding small-cap stocks, especially those that are highly valued in overbought situations. In particular, she noted that core sectors that enjoy market monopoly may also continue to show strong market dynamics.

Currently, almost all major sectors are in the overbought zone. In this situation, it would make more sense to closely monitor the development of individual stocks, rather than focusing on down or up trends across the sector.

“My advice to risk-averse investors is to allocate in a proportion that does not overexposure their portfolio to small-cap stocks. Investors with portfolios consisting mainly of large-cap stocks can consider hedging with Nifty Index Put. said third-party portfolios of mid- and small-cap stocks could cover them with July Series mid-cap index put options to offset volatility.

(Disclaimer: Recommendations, suggestions, views and opinions of experts are their own. They do not represent the views of TN Network.)