As the Lok Sabha election 2024 looms, it’s crucial to recognize its potential impact on the Indian stock market. Prabhudas Lilladher, a leading brokerage, foresees sectors like FMCG, Auto, Healthcare, IT Services, Private Banks, and Capital Goods as a ‘perfect hedge’ against the election results, slated for 4th June 2024. The brokerage advises investing in 30 stocks from these sectors, regardless of the election outcome, to mitigate potential volatility.
Prabhudas Lilladher asserts that the performance of sectors such as FMCG, Auto, Healthcare, IT Services, Private Banks, and Capital Goods is expected to remain robust, irrespective of the political regime. These sectors are touted as a prudent defensive hedge against the uncertainty of election results, providing investors with a sense of stability.
What iif Modi wins Lok Sabha elections?
On why we should be bullish on the above-mentioned segment irrespective of the Lok Sabha poll outcome, Prabhudas Lilladher’s report said, “We expect continuation of policy if NDA comes back to power, and themes around Infra, Defence, CG, New energy, Tourism, etc. will continue to do well. Consumer, 2W, and Tractors can get a boost from green shoots in rural demand and expectations of normal monsoons.”
What if Modi loses Lok Sabha polls?
On what if there is a surprise on 4th June 2024, the Prabhudas Lilladher report said, “Unexpectedly if INDIA alliance comes to power, it will lead to de-rating in markets and specific sectors like defence, capital goods, tourism, PSU’s (including Banks), drones, AMC, wires and cables, plastic pipes and EMS. PL believes sectors like FMCG, retail, 2W, PV (entry-level), tractors, real estate, logistics (Ecom centric) and consumer durables will benefit from expected policies. Markets have been nervous for the past couple of weeks on account of an unexpected repeat of UPA victory in 2004 that resulted in a 15% decline in Sensex in a single day.”
Stocks to buy
Unveiling the stock market strategy to keep investors’ money safe against the Lok Sabha election 2024, Prabhudas Lilladhar provided a list of sectors and stocks that will do well irrespective of the regime in power.
Here we list out sector-wise stock recommendations by Preabhudas Lilladher:
FMCG: Rural demand revival will get a boost if freebies supplement it. Key stocks – HUL, Dabur, Emami, Marico, GCPL, Britannia, Varun Beverages;
Auto: Two-wheelers, Tractors, and entry-level cars will benefit. Key stocks – Hero MotoCorp, Maruti and M&M;
Healthcare: Perfect defensive with Sun Pharma, Cipla, Max Health and Jupiter as key stocks;
IT: More of a global play with minimal impact. Key stocks – TCS, LTI Mind tree, HCL tech, Cyient, and Tata Tech;
Private Banks: Expect de-rating of all PSUs, including banks. The focus may shift to top-rung private banks already trading at a significant discount on their last 10-year P/ABV. Key stocks – HDFC Bank, Kotak Mahindra Bank, Axis Bank, ICICI Bank; and
Capital Goods: While many segments in EPC, defence, and new energy are at risk, PL believes global technology leaders like Siemens, ABB, Schneider, Honeywell, Elantas Beck, GE T&D, Hitachi Energy, Timken, Schaeffler, etc., are likely to suffer much less impact.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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