What are ‘Modi stocks’? Global brokerage CLSA has this to say on these ‘outperformers’ ahead of Lok Sabha election results

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Investors have recognized a brand new group of shares, dubbed “Modi stocks,” which are anticipated to profit from the favorable insurance policies of Prime Minister Modi’s authorities. These shares transcend the same old market leaders and embrace 54 corporations throughout the F&O universe, says international brokerage agency CLSA.
Half of these corporations are PSUs, and the record options names similar to L&T, NTPC, NHPC, PFC, ONGC, IGL, Mahanagar Gas, Bharti Airtel, Indus Towers, and Reliance Industries (RIL), in accordance to an ET report.
Over the previous six months, 90% of Modi shares have outperformed the Nifty index, in contrast to solely 42% of different corporations. CLSA analysts counsel that this pattern might persist if the election results are sturdy.
However, in addition they predict that the slim election theme-based rally may conclude in June-July, and banks may provide one of the best risk-reward progress alternative within the second half of 2024.
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PM Modi has been brazenly supportive of PSUs, setting him aside from his predecessors, the ET report mentioned. In August final yr, he mentioned, “Share market mein ruchi rakhne wale ko yeh guru mantra hai ki jin sarkari companiyon ko yeh log gaali de na, aap uspe daav laga dijiye. Sab acha hi hone wala hai. (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 have been re-rated in recent years due to factors such as attractive valuations, high dividend yields, growing order books, and the government’s emphasis on maximizing value for state-owned companies. The late ace investor Rakesh Jhunjhunwala was also highly optimistic about PSU stocks before his passing.
The stock market is optimistic about the BJP securing a significant victory in the Lok Sabha elections, with results to be announced on June 4. Analysts believe that a strong BJP mandate would lead to increased investment in infrastructure, benefiting sectors such as industrials, capital goods, utilities, defense, cement, and real estate.
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Conversely, a weaker BJP mandate might result in higher spending on consumption and lower-income households, which could be less favored by broader markets but could benefit consumption-led sectors. Manish Sonthalia, Chief Investment Officer at Emkay Investment Managers, says, “BFSI, PSUs, and industrials are anticipated to do nicely. BFSI has led the earnings progress and seen a correction in valuation. Investment-related themes will come into play with energy capex increase within the subsequent 3 to 5 years. We are re-rating public sector items as some authorities entities can have a bonus in sectors similar to defence, oil advertising and marketing corporations, and energy financers.”
Analysts anticipate substantial good points following the election results on June 4, with JM Financial advising buyers to take benefit of any dips out there.
After the election, the main focus will shift to the Union Budget, which is anticipated to be introduced in July. Policy continuity ensures that the federal government’s main emphasis will stay on infrastructure growth and manufacturing, benefiting sectors within the protection and capital items house.


Nilesh Desai
Nilesh Desaihttps://www.TheNileshDesai.com
The Hindu Patrika is founded in 2016 by Mr. Nilesh Desai. This website is providing news and information mainly related to Hinduism. We appreciate if you send News, information or suggestion.

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