Most of the exit polls indicate over 300 seats for the BJP-led NDA. The optimism of a stable government is reflected in Nifty already, CLSA said in a note
Indian markets posted best opening gains since 2014 Lok Sabha results day as the majority of exit polls released after seven phases of voting show the BJP-led NDA winning 267-365 seats in Lok Sabha.
Market volatility is likely to rise as we approach the election results that will be out on May 23. If the actual results follow exit polls, there is a higher possibility of markets extending the rally towards 12,000, which would also mean a new high for the Nifty50.
"If Nifty crosses the previous peak of 11,856 then we can expect it to rise further and test 12,000 before May 23," said Rusmik Oza, Head of Fundamental Research, Kotak Securities.
"For Nifty to cross 12,000, a strong single party majority for the BJP is required. Going forward if we have the BJP-led coalition coming back to power on May 23, then expect broader participation as mid and smallcap are the most beaten down in the last 18 months," he added.
Most of the exit polls indicate over 300 seats for the BJP-led NDA. The optimism of a stable government is reflected in Nifty already, CLSA said in a note. “If exit polls are right, more outperformance is ahead as the risk of fiscal worries will decline,” added the note.
The valuations and economic reality will cap the near-term Nifty upmove towards 12,000. CLSA top picks include names like ICICI Bank, Axis Bank, HDFC, Godrej Properties, among others. The global investment bank also likes Reliance Industries and ITC.
“The exit poll projections for NDA are moderately ahead of projections for the pre-poll surveys before the start of national elections, which showed the BJP-led NDA winning 270-310 seats,” Kotak Institutional Equities pointed.
“The exit polls would be seen as a modest positive for the Indian stock market as the market was largely factoring in the return of the BJP-led NDA government. We could see a small rally after May 23 if the results are in line with the market’s expectations,” it said.
However, valuations are not cheap despite the muted performance of the broad market, but there are plenty of opportunities in select stocks.
In terms of specific stocks, Motilal Oswal top largecaps ideas include ICICI Bank, SBI, Maruti, Ultratech, L&T, Titan, Bharti Airtel, Coal India, Infosys, and HDFC Life.
Among midcaps, the brokerage likes Federal Bank, LIC Housing Finance, Indian Hotels, Siemens, ABFRL, Crompton Consumer, Ashoka Buildcon, JSPL and Godrej Agrovet.
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.Note: The article has been updated with quotes from Rusmik Oza, Head of Fundamental Research, Kotak Securities.