The Indian electorate has given a fractured mandate in the 2024 Lok Sabha elections after giving BJP an absolute majority in the 2014 and 2019 elections which took markets by surprise resulting in a 6 percent cut in Nifty.
Reconsidering its earlier portfolio in light of the unexpected election results, brokerage house Prabhudas Lilladher believes portfolio allocations and future policies of NDA government will be a key determinant of market movements.
Severe jolt to BJP in Uttar Pradesh (new PDA social engineering), Maharashtra (fractured parties) and West Bengal will keep tricky reforms regarding PSU divestment, GST, labor laws, agriculture, and modern retail/E-commerce at bay, it opined.
It further noted that with elections around the corner in several major global economies including the USA, investors would watch out for the likely stand of the US Fed and other central banks.
As per the brokerage, incremental re-rating in PSU, Capital Goods, Infra, Defence, and Railways, etc. will take a back seat post the sharp run-up of the past few years, given their stretched valuations until policy clarity emerges. Meanwhile, Consumption, Private banks, Auto, and Healthcare might come into focus given the expected focus on rural India and normal monsoons, where it had recently increased weights in the model portfolio, said the brokerage.
Favorable monsoon forecast and RBI rate revision in the near future, drive the consumption sector, it added.
The brokerage has come out with a list of stocks in each sector where the near-term re-rating looks unlikely as well as the sectors that are likely to bounce back.
Infra - L&T, Adani Port, Road & Metro EPC companies
Defence - HAL, BEL, BDL, BEML, Mazgaon Dock, Cochin Ship
Cement - Ultratech, Ambuja Cement
New Energy - Reliance Inds, Sterling Wilson, Waree, L&T, Praj Inds
Metals - JSPL, JSL
PSU Banks - SBI, BOB, Canara, Union, PNB
PSU - Across sectors including OMC
Wire and Cable, EMS - Polycab, RR Kabel, Dixon, Amber, Keynes, Syrma
FMCG - HUL, Britannia, GCPL, Marico, Dabur, Emami, Varun Beverages
Auto - Eicher, Hero MotoCorp, M&M, Maruti Suzuki
Pharma, Hospital - Sun, Max Healthcare, Lupin, Jupiter Hospitals
Private Banks - HDFC Bank, Kotak, Axis and ICICI Bank
Capital Goods - Siemens, ABB, Elantas Beck, Timken, Hitachi Energy, GE T&D
Commodities - Hindalco
Consumer Durables/Telecom/Others - Havells India, Bharti Airtel, Delhivery, Astral, Crompton Consumer
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
