Stocks which are likely to benefit the most include names like J&K Bank, NHPC, Bharat Dynamics, Bharat Electronics, L&T, Ashoka Buildcon, and GE T&D.
Union Home Minister Amit Shah took the nation by storm on August 5 after he announced the abrogation of Article 370 and Article 35A in the Rajya Sabha, effectively revoking the special status granted to Jammu and Kashmir.
The upper house of the Parliament also passed the J&K Reorganisation Bill which proposes bifurcation of the state into two Union Territories - Jammu & Kashmir and Ladhak.
Even though the event is largely market-neutral, it opens doors for fresh investment into the states, something that was also stressed upon by the Prime Minister, in his address to the nation on August 8.
“The event is broadly market neutral. However, on the political economy front, there might be some longer-term implications. The market script for the past 6 years has been that the strengthening of Modi government’s hand politically has been extrapolated by participants as a precursor to accelerating economic activity and thereby earnings,” JM Financial said in a report.
Given the multiple false dawns, the market mood might be less optimistic this time around. From a stock-specific standpoint, there are very few J&K plays as most of the economic activity in the state lies outside the listed space.
“Outside of NHPC and J&K Bank, there are very few listed plays with any implications from a J&K economy standpoint. From a second-order impact standpoint - greater defence spending as a consequence of heightened tensions along the LOC and a hardened military posture,” said the report.
JM Financial expects the likely beneficiaries would be Bharat Dynamics and Bharat Electronics. The state economy primarly lies in the realm of unorganised sectors such as horticulture and tourism and is extremely small.
“Greater infrastructure push along strategically important highways and dam constructions to fully exploit water awarded under the Indus water treaty should have some beneficiaries including L&T, Ashoka Buildcon, and GE T&D,” the note added.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.