There is much-needed optimism among market players as exit polls show a clear majority for the Modi government as India awaits the outcome of the historic election on June 4.
The average of all exit polls indicates that the National Democratic Alliance (NDA), which had won 353 seats in 2019, is expected to win about 370 seats.
The triumph of PM Modi/BJP, ACCording to brokerage Motilal Oswal, is a positive sign for the economy and capital markets since it offers stability and continuity in policymaking with a majority administration led by a single party, which is likely to continue advancing its economic agenda. Recent apprehension and worry in the equity markets over the looming political unrest led to a substantial increase in volatility in April and May of 2024.
Also Read: Indian Stock Market: Exit polls sentimental positive for capex stocks, says Jefferies; likes TVS, Coal India, ONGC, ACC
According to the brokerage, markets will breathe a sigh of relief following this clear ruling and return to the basics and business as normal. Overall, macroeconomic conditions in India are excellent (GDP growth of 8.2% in FY24 on the back of around 7% growth in FY23, inflation at about 5%, current account and fiscal deficits well within tolerance band, stable currency, etc.); corporate earnings are solid (Nifty 50 ended FY24 with 25% earnings growth, and FY25/26 earnings are likely to post 14-15% CAGR); the country is focusing on manufacturing, capex, and infrastructure creation; and valuations are at 20x one-year forward earnings.
Motilal Oswal believes that this ruling, along with the ensuing political stability and consistency in policy-making, would serve as the cherry on top, maintaining India’s place as the centre of attention.
Also Read: Stock market today: Nifty 50, Sensex hit record highs after exit polls predict BJP-led NDA election win
Within a constant backdrop of earnings growth, the brokerage said that their model portfolio continues to be in line with the major domestic cyclical themes. Financials, Consumption, Industrials, and Real Estate continue to be areas where Motilal Oswal is overweight.” The four main investing themes they like are industrials, consumer discretionary, real estate, and PSU banks.
Motilal Oswal recommends the following stocks as top picks: Midcaps: Indian Hotels, Godrej Properties, Global Health, PNB Housing, Cello World, and Kirloskar Oil; Large caps: ICICI Bank, SBI, L&T, Coal India, M&M, Adani Ports, ABB, HPCL, and Hindalco.
Also Read: Sensex Today Live Updates: Sensex, Nifty at record highs at opening bell; Auto, Adani group stocks rally
Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
