The analysis of all 12 exit polls indicates a clean win for the third time for incumbent Prime Minister Narendra Modi-led Bhartiya Janata Party in the 2024 Lok Sabha election, whose results will be announced on June 4.
Since the present government's prospects are very good, NDTV Profit surveyed brokerages about their investment themes for the future. Here are the results:
Top 5 Stock Picks
Here are the top five stock picks based on brokerage recommendations if the NDA wins the election:
Adani Ports: With support from Citi and Motilal Oswal, Adani Ports is projected to benefit significantly from infrastructure and logistics development, which is critical for bolstering trade and transportation networks.
Coal India: Motilal Oswal, Philip Capital, and Jefferies recommend Coal India, expecting it to perform well with a continued focus on energy and industrial growth.
Larsen & Toubro: Endorsed by Motilal Oswal and Citi. The company stands out in the industrial and infrastructure sectors. These brokerages expect that under a stable NDA regime, it will thrive with ongoing and new projects.
ICICI Bank: Favoured by Motilal Oswal and Philip Capital. The private lender is viewed as a strong player in the financial sector and is expected to benefit from political stability and sustained economic growth.
State Bank of India: Highlighted by both Motilal Oswal and Philip Capital, SBI is poised to reinforce its dominant position in the banking sector.
Top Investment Themes
Most of the eight brokerages tracked by NDTV Profit favored industrials, infrastructure, real estate, manufacturing, cement and capex as the top investment themes or sectors. None of these brokerage were bearish on any of the abovementioned themes.
Industrials sector was the top theme, mentioned by five out of the eight brokerages tracked for the poll.
What Are Brokerages Stating?
Bernstein anticipates ongoing infrastructure and capex projects, with the government likely initiating ambitious new initiatives. They also predict that incentives and foreign direct investment will continue to support manufacturing.
Jefferies sees a cyclical uptick in private capex and recommends the real estate, industrials and power sectors for long-term investment.
With a BJP win, Nomura expects a boost in infrastructure build-out and manufacturing-led growth, as well as a short-term rally and continued PSU stock performance due to potential reforms.
Citi expects stocks tied to infrastructure, logistics, industrial, and manufacturing sectors to perform well, highlighting Adani Ports and Special Economic Zone, L&T, and Bharat Electronics Ltd. as beneficiaries.
Motilal Oswal, who is "overweight" on the industrials and real estate sectors, anticipates strong valuations driven by a focus on manufacturing, capital expenditure, and infrastructure. The brokerage's top picks within the top five themes identified include L&T, Adani Ports, ABB India, Indian Hotels Co., and Godrej Properties.
Most Bearish On The IT Space
The top sector that brokerages are bearish on is the information technology space. Three out of eight brokerages have a negative view of the space, while the remainder have no mention of the sector.
While brokerages did not mention a specific reason, it is important to note that valuations of Indian IT companies are near all-time highs. Furthermore, global risks are affecting client budgets, giving companies no near-term visibility. While the deal pipeline remains strong, revenue conversion is not taking place.
A Mixed Bag: Financials, Consumption
Brokerage views on the financials and consumer discretionary space were mixed, but exhibited a positive bias.
Financials: Motilal Oswal and Philip Capital have a positive stance, while Emkay has a negative stance. When we look specifically at the banking sector, IIFL Securities and Jefferies prefer private banks, but Motilal Oswal is bullish on PSU Banks. IIFL Securities also maintains a positive stance on NBFCs.
Consumption or Consumer Discretionary: As far as the space is concerned, Motilal Oswal and Emkay have a positive view while Berstein maintains a negative stance.
Other Key Themes And Sectors
Other investment themes or sectors that stood out after reviewing brokerage recommendations include the capital goods space, which takes both the defence and railway sectors into consideration. Brokerages are also bullish on the private banking, EV, energy and logistics sectors.
Jefferies highlights undervalued opportunities in private financial names like HDFC Bank and Bajaj Finance, as well as auto names like Eicher Motors and TVS Motor.
Emkay sees the housing, tourism, and aviation sectors as immediate beneficiaries of government continuity, with potential gains in textiles and pharmaceutical API.
Brokerage Top Stock Picks
Motilal Oswal: ICICI Bank, SBI, L&T, Coal India, M&M, Adani Ports, ABB, HPCL, Hindalco, Indian Hotels, Godrej Properties and Global Health.
Philip Capital: Top picks for a 1-year perspective: SBI, Bank of Baroda, Canara Bank, PFC, REC, Shriram Finance, UltraTech, Siemens, Hero MotoCorp and TVS Motor.
For a 2-3 year perspective, they favour HDFC Bank, ICICI Bank, Kotak Bank, Infosys, HCL Tech, Reliance, Sun Pharma, Coal India, JSW Steel and Maruti.
Citi: Adani Ports, L&T, BEL
Jefferies: HDFC Bank, Bajaj Finance, Eicher Motors, TVS, Coal India, ACC and Shree Cement.
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