As majority exit polls predict a landslide victory for the BJP-led NDA, projecting between 316-400 seats, brokerages expect markets to reach new all-time highs amid increased volatility. Analysts anticipate that sectors related to capex, such as manufacturing, infrastructure, real estate, and industrials, will outperform once the ruling government retains power on June 4. In contrast, IT and consumption sectors might underperform.
Since exit polls imply policy continuity, sustained focus on capex, and fiscal consolidation, domestic sectors particularly infra, manufacturing, capex theme will outperform in the near-term, said analysts at Nomura.
Jefferies also views the exit poll results positively for capex stocks, remaining bullish on real estate, industrials, and power for the long term.
"We favor private financials like HDFC Bank, IndusInd Bank, and Kotak Mahindra Bank due to their significant discounts. Among autos, we prefer Eicher Motors, TVS Motor, and select cement companies like ACC and Shree Cement," they stated.
On the other hand, Motilal Oswal maintained an overweight position on financials, consumption, industrials, and real estate sectors. "Our top large-cap picks are ICICI Bank, SBI, L&T, Coal India, M&M, Adani Ports, ABB, HPCL, and Hindalco. For mid-caps, we are positive on Indian Hotels, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World, and Kirloskar Oil," their analysts commented.
JPMorgan analysts targetted Nifty at 25,000 - the highest among other brokerages if BJP retained power in 2024 elections and RBI started easing interest rates. They suggested market participants to focus on three key themes - indigenous defense, waterways, and manufacturing.
"In financials, we are overweight on SBI, Bank of Baroda, ICICI Bank, LIC Housing, Shriram Finance, HDFC AMC, ICICI Prudential, and ICICI Lombard. Among autos, we select Bajaj Auto, M&M, Ashok Leyland, Exide, Samvardhana Motherson as top picks. In realty, Godrej Properties and Prestige Estates are top bets. Finally, in healthcare - Mankind Pharma, Abbott India, Sun Pharma, Max Healthcare, and Rainbow Hospitals are top picks," JPMorgan stated in their strategy note.
Conversely, analysts flagged off IT and consumption to remain weak this year. Bernstein, Jefferies, and IIFL Securities were underweight on IT and most consumer-centric pockets.
However, Kotak Institutional Equities takes a bearish stance, finding many sectors and stocks overvalued relative to their fair value. "We expect a significant BJP victory to maintain these inflated-to-bubble valuations in parts of the market," they said.
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