Riding along with the benchmarks, the broader market also witnessed strong buying on November 25, which helped the Nifty Smallcap 100 and the Nifty Midcap 100 indices rise close to 2 percent each. The surge in the two broader market indices was primarily led by PSU names which were rallying today on the back of hopes of a capex push following the BJP-led Mahayuti alliance's staggering victory in Maharashtra.
The BJP-led alliance secured over 200 seats in Maharashtra, which according to analysts, signals continuity in the central government’s development agenda. Analysts at Kotak Institutional Equities expect limited fiscal consolidation, increased central government capital expenditure in the second half of FY25, and a sentiment-driven uplift in sectors such as infrastructure, urban development, and manufacturing, which are aligned with BJP policies.
That's not all, analysts at Motilal Oswal Financial Services also believes that the BJP's win in Maharashtra paves the way for a consolidated centre and state politics in the state, which should allow a pick-up in stalled infra development and other pending issues, another positive for PSU companies, manufacturing, realty and infrastructure companies.
Also Read | Maharashtra Election win fires up PSU stocks – banks, energy, infra big gainers
On that account, several PSU stocks hogged on the limelight today, registering strong gains. Shares of PFC, IRFC, BEL, Central Bank of India, RVNL, Bharat Dynamics, NBCC (India), GAIL, Concor Corporation of India, SAIL, among others surged in the range of 3-8 percent, liftin sentiment for the broader market which houses most of these stocks. In addition to that, all sectoral indices traded in the green which further bolstered sentiment for the broader market.
The market breadth also tilted heavily in favour of gainers as more than two stocks rose for each one that fell. About 2,498 shares rose, 1,018 shares fell, and 122 shares were unchanged.
With state and general elections out of the way, analysts also anticipate the government to shift its focus towards spending, meaning a rise in public capex in the second half of the current fiscal. The increase in government spending is also expected to provide support to PSU names which have gone through a phase of sharp correction in recent months.
Regardless, BJP's Maharashtra win has come out as the positive trigger that the market needed to uplift sentiment in the near-term. Despite that however, not all pockets of the market that stand poised to benefit from the government's capex are likely to witness similar stock performances. While infra and construction names may see a sustained uptick, stocks belonging to the railway and defence sectors are unlikely to witness fireworks due to their valuations, which despite the correction, still remain expensive, analysts believe.
Also Read | BJP's clear win in Maharashtra may boost markets in near-term, but valuations a concern: Kotak Securities
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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