Stocks of 54 companies, most of them public sector undertakings (PSUs), could be direct beneficiaries of the policies of the current government led by Prime Minister Narendra Modi, said international brokerage CLSA.
The brokerage further predicted that the stocks of India’s state-run companies, or PSUs, may see a top in June or July, ahead of the presentation of budget by the new government.
A similar pattern was observed in the last two general elections when PSUs gained after the poll results.
‘Modi stocks’
These 54 stocks have been classified as “Modi stocks” by the CLSA, since they have been rallying based on prospects of the BJP coming back to power after June 4 when the Lok Sabha poll 2024 results are announced.
As many as 90 per cent of the “Modi stocks” have seen an election-focused rally in the past six months and have outperformed the Nifty.
“This trend is likely to continue, particularly if the incumbent government returns with a strong majority,” the brokerage said.
The global brokerage went on to say that this increase may be driven by a narrow, election-themed rally expected to taper off by mid of 2024.
However, CLSA expects that a few weeks after the election results, investors could face a “reality check” that many positives would already have been priced in these stocks.
“This may drive profit-taking by the less patient holders of Modi stocks,” the brokerage said.
Which are these stocks?
The stocks include L&T, NTPC, NHPC, PFC, ONGC, IGL, Mahanagar Gas.
It also includes bank stocks such as HDFC Bank, ICICI Bank, Axis Bank, and IndusInd Bank.
Other stocks highlighted by CLSA are Ashok Leyland, UltraTech, Bajaj Finance, Max Financials, Zomato, and DMart.
Among the telecom-related sectors, Bharti Airtel, Indus Towers, and Reliance Industries.
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