India General Election 2024 - Abki Baar NDA Sarkar? Prabhudas Lilladher's Take

Prabhudas Lilladher Report

Indian electorate have given a fractured mandate in 2024 Lok Sabha elections after it gave BJP absolute majority in 2014 and 2019 elections which took markets by surprise resulting in ~6% cut in NIFTY. Although BJP failed to get absolute majority, NDA victory in an environment of drought (last year), higher global inflation and huge prevalence of freebies and loan waivers seems a commendable task.

PM Modi is likely to be only Indian leader after Pt. Nehru to win mandate thrice. We believe portfolio allocations and future policies of NDA Govt will be a key determinant of market movements. Severe jolt to BJP in Uttar Pradesh (new PDA social engineering), Maharashtra (fractured parties) and West Bengal will keep tricky reforms regarding PSU divestment, GST, labor laws, agriculture, modern retail/ Ecom at bay.

With elections around the corner in several major global economies including USA, we would watch out for likely stand of U.S. FED and other central banks. Incremental re-rating in PSU, Capital Goods, Infra, Defence, and Railways etc. looks unlikely given stretched valuations until policy clarity emerges.

Given expected focus on rural India and normal monsoons sectors like consumer, auto, pharma, private banks, Durables etc. might come to focus, where we had recently increased weights in model portfolio.

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