While earnings are the single largest trigger for share prices to move in the long run, a lot of revenue potential for companies also hinges on government policies. And therefore, investors have fine-tuned their equity portfolios to factor in major structural reform rush in Modi 3.0.
Domestic cyclical sectors such as infrastructure, industrials, defence, capital goods and automobiles are likely to remain major beneficiaries. “In the short term, after the election outcome, for the next two weeks, we expect the small & mid-cap space could outperform large caps, with domestic cyclical sectors and PSUs in focus,” says Sharekhan.
Confident that equity will outperform significantly as an asset class, investors are following multi-year investment themes based on the 3Cs of Capex (Infrastructure, Capital Goods & Real-estate), Capital (Banks & Financials), and Consumption (Discretionary Spending).
Also read | ‘Aayega To Modi’ becomes new ATM strategy for stock investors before election result
Here are top election stock ideas from various brokerages:
Anand Rathi
We have shortlisted sectors and stocks amongst our existing coverage which could benefit in the medium to long term. Investors could add these ideas in a staggered manner – Sona BLW, Hero Motocorp, Birla Corp, Ramco Cements, PNC Infra, Ashoka Buildcon, SBI, Axis Bank, Poonawalla Fincorp, Cholamandalam Investment, Siemens, Cummins, Lemon Tree, Indian Hotels, RateGain Tech, Sumitomo, Bayercrop, Anup Engg, Inox India, Kaynes Tech, Bharat Electronics (BEL), NHPC, Suzlon, Coal India, Bharti Airtel, KPIT Tech, ITC, Hero Motocorp, Marico.
Nomura
We are overweight on financials, infrastructure, oil and gas, telecom, power, capital goods/defence and internet.
Our top picks in India are SBI, ICICI Bank, GCPL, M&M, BHEL, Reliance Industries and Bharti Airtel. In midcaps, we like Federal Bank, Voltas, Lupin, Medplus, InfoEdge and Uno Minda.
Axis Capital
The focus of Modi 3.0 will likely continue on developing the country’s public infrastructure such as roads, water, metro, railways, defence, digital infrastructure, and green technologies.
We recommend the following stocks: SBI, Bank of Baroda, REC, NTPC, JSW Energy, Suzlon, RVNL, J Kumar Infra, and Hindustan Aeronautics.
Motilal Oswal
Our model portfolio remains aligned with the key domestic cyclical themes amid a consistent backdrop of earnings growth. We remain overweight on financials, consumption, industrials, and real Estate. Industrials, consumer discretionary, real estate, and PSU banks are our key preferred investment themes.
Top ideas: ICICI Bank, SBI, L&T, Coal India, M&M, Adani Ports, ABB, HPCL, Hindalco, Indian Hotels, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World, and Kirloskar Oil.
CLSA
ONGC, NTPC, NHPC, SBI, Power Finance, IGL, Mahanagar Gas in the PSU space. Of the non-PSU Modi stocks, CLSA analysts like Ashok Leyland, Ultratech, L&T and the tariff-hike-linked telecom stocks via Bharti Airtel, Indus Towers and Reliance.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
