Ramdeo Agarwal, president of Motilal Oswal, says these stocks could benefit if Prime Minister Narendra Modi is re-elected.

-
If Indian Prime Minister Narendra Modi returns to power for an unprecedented third consecutive term, shares in defence, infrastructure, railways and capital goods companies will rise, said Motilal Oswal Financial Services, a top brokerage.




"These were the areas the government was focusing on and investing money in. There is a good chance they will remain in power. When they come back, they will work with more vigour," Ramdeo Agrawal, chairman and co-founder of the brokerage, said on Saturday.

"You will see significant government actions to strengthen these sectors over the next five years."

India's weeks-long general election ends on Saturday with votes counted on June 4.

Opinion polls suggest Narendra Modi's ruling Bharatiya Janata Party (BJP) is expected to return to power, but low voter turnout has raised concerns about its victory. Analysts say a surprise defeat for Modi is unlikely but fear a market correction like the one two decades ago could happen if he is given an "uncertain" mandate.

India's benchmark Nifty 50 plunged 17 percent in two sessions following the 2004 election results, when the then-ruling Bharatiya Janata Party-led coalition lost despite being expected to stay in power.

During his two terms in office, Modi has focused on improving India's crumbling infrastructure and revitalizing domestic manufacturing, including the defense sector. The government has proposed a record infrastructure spending of $133 billion for fiscal 2025. "If for some reason the ruling party doesn't have a clear mandate, that would be scary. The adjustments will be quite sharp as expectations are very high for policy continuity," said Motilal Oswal's Agrawal.

Any changes to the country's capital gains tax regime in the post-election budget could also have an adverse effect on markets, he said.

"The issue of capital gains tax adjustment is definitely up for debate. The government didn't deny it.

Shares of top defence, infrastructure and capital goods companies have risen between 64% and 480% in the past 12 months, beating the gains of the Nifty 50 by a quarter.

Disclaimer
The information provided in this article is based on current reports and statements from relevant parties.

Comments

Post a Comment

Best Blogs

IB Interview Questions: M&A : Level 1 M&A Questions

-
Image
1. Why do companies merge? While are many reasons that companies merge the underlying driver of most M&A deals to expedite growth and/or generate cost savings to create value for the owners of the business. When people say that M&A is an ‘art’ and a ‘science’, what does that mean? The science refers to the mechanical valuation methods (Comps, DCF, etc.), but the art is in making a judgment call on valuation based on the outputs of the various valuation methodologies. 2. Who can pay more when buying a company: a Financial buyer or Strategic buyer? Why? Strategic (i.e. corporate) buyers can typically pay more than Financial (i.e. Private Equity) buyers because strategic buyers typically have overlapping operations that can be removed post-merger to generate cost savings (i.e. Synergies). 3. When are sponsors and corporate buyers on equal footing? When a Financial buyer already owns a competing asset, they can generate synergies (which justifies a higher price) and thus are on mor
Read more

Getting into Investment Banking: A Comprehensive Guide

-
Image
Introduction Breaking into investment banking (IB) is no small feat, whether you're pre-MBA or post-MBA, from a target or non-target school. While high GPAs and test scores are standard, they are often not enough to stand out. Here’s a strategic approach to help you embark on a successful investment banking career. 1. Network Extensively When your application lands at an investment bank, it’s usually reviewed by a small team of bankers responsible for recruiting from specific schools. Given the competitive nature of this field, networking is crucial. Why Networking Matters: Decision-making bankers are more likely to advocate for you if they know you. Especially vital for non-target school students. Engage with alumni and other connections at your target firms. How to Network: Start reaching out to analysts and associates a few months before core recruiting starts. Look for non-target alumni if you're from a non-target school; they often help each other out. Demonstrate Interest
Read more