Investors have identified a new group of stocks called “Modi Stock,” who are expected to benefit from favourable policies of Prime Minister Modi's government. These stocks go beyond the usual market leaders and include 54 companies within the F&O universe, says global brokerage firm CLSA.
Half of these companies are from the public sector and the list includes L&T, NTPC, NHPC, PFC, ONGCIGL, Mahanagar Gas, Bharti Airtel, Indus Towers, and Reliance Industries According to an ET report, RIL has taken this step.
Over the past six months, 90% of Modi's stocks have outperformed the Nifty index, while only 42% of stocks of other companies have outperformed. Analysts at CLSA suggest this trend could continue if the election results are strong.
However, they also predict that the narrow election theme-based rally may end in June-July, and banks may offer the best risk-reward growth opportunity in the second half of 2024.
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PM Modi has been openly supportive of PSUs, setting him apart from his predecessors, the ET report said. In August last year, he said, “This is a guru mantra for those interested in the share market that whatever government companies these people abuse, you should make a claim on them. Everything is going to be good. (This is a guru mantra for those who have interest in stock markets – invest in PSU companies ridiculed by the Opposition and everything will be good).”
PSU Stocks PSU stocks have been rerated in recent years due to factors such as attractive valuations, high dividend yields, growing order books and the government's emphasis on maximising value for state-owned companies. Late legendary investor Rakesh Jhunjhunwala was also extremely bullish on PSU stocks before his demise.
The stock market is optimistic about BJP's significant victory. Lok Sabha ElectionsAnalysts believe a strong mandate for the BJP will lead to increased investment in infrastructure, benefiting sectors such as industry, capital goods, utilities, defence, cement and real estate.
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In contrast, the BJP's weak mandate could result in higher spending on consumption and low-income households, which may be less liked by the broader markets but could benefit consumption-led sectors. Manish Sonthalia, chief investment officer, Emkay Investment Managers, says, “BFSI, PSU and industrial sectors are expected to do well. BFSI has led earnings growth and has seen valuation improvement. Investment-related themes will come into play with power capex building up over the next 3 to 5 years. We are rerating PSUs as some of the government entities will benefit in sectors such as defence, oil marketing companies and power financiers.”
Analysts expect substantial gains after the election results on June 4, and JM Financial advises investors to take advantage of any dips in the market.
After the elections, all focus will shift to the Union Budget, which is expected to be presented in July. Policy continuity ensures that the government's primary focus will remain on infrastructure development and manufacturing, benefiting sectors such as defence and capital goods sector.
Half of these companies are from the public sector and the list includes L&T, NTPC, NHPC, PFC, ONGCIGL, Mahanagar Gas, Bharti Airtel, Indus Towers, and Reliance Industries According to an ET report, RIL has taken this step.
Over the past six months, 90% of Modi's stocks have outperformed the Nifty index, while only 42% of stocks of other companies have outperformed. Analysts at CLSA suggest this trend could continue if the election results are strong.
However, they also predict that the narrow election theme-based rally may end in June-July, and banks may offer the best risk-reward growth opportunity in the second half of 2024.
Read this also | More than the combined GDP of Pakistan, Nepal, Sri Lanka! LIC's assets under management cross Rs 50 lakh crore
PM Modi has been openly supportive of PSUs, setting him apart from his predecessors, the ET report said. In August last year, he said, “This is a guru mantra for those interested in the share market that whatever government companies these people abuse, you should make a claim on them. Everything is going to be good. (This is a guru mantra for those who have interest in stock markets – invest in PSU companies ridiculed by the Opposition and everything will be good).”
PSU Stocks PSU stocks have been rerated in recent years due to factors such as attractive valuations, high dividend yields, growing order books and the government's emphasis on maximising value for state-owned companies. Late legendary investor Rakesh Jhunjhunwala was also extremely bullish on PSU stocks before his demise.
The stock market is optimistic about BJP's significant victory. Lok Sabha ElectionsAnalysts believe a strong mandate for the BJP will lead to increased investment in infrastructure, benefiting sectors such as industry, capital goods, utilities, defence, cement and real estate.
Read this also | Boost to Indian economy! S&P upgrades India's credit rating from 'stable' to 'positive'
In contrast, the BJP's weak mandate could result in higher spending on consumption and low-income households, which may be less liked by the broader markets but could benefit consumption-led sectors. Manish Sonthalia, chief investment officer, Emkay Investment Managers, says, “BFSI, PSU and industrial sectors are expected to do well. BFSI has led earnings growth and has seen valuation improvement. Investment-related themes will come into play with power capex building up over the next 3 to 5 years. We are rerating PSUs as some of the government entities will benefit in sectors such as defence, oil marketing companies and power financiers.”
Analysts expect substantial gains after the election results on June 4, and JM Financial advises investors to take advantage of any dips in the market.
After the elections, all focus will shift to the Union Budget, which is expected to be presented in July. Policy continuity ensures that the government's primary focus will remain on infrastructure development and manufacturing, benefiting sectors such as defence and capital goods sector.