Stocks to purchase today: Following the BJP's comfortable victory in Madhya Pradesh, Rajasthan, and Chhattorgarh, stock market gurus anticipate significant upside in the stock market today. They believe the Nifty 50 reached a new high of 20,291 on Friday as a result of pro-BJP exit polls. So, now that the BJP has secured a solid majority in Hindi heartland states, the odds of the Indian stock market extending its participative rise seen on Friday last week are very high.
According to a Motilal Oswal article, "according to the state assembly election results, the BJP has comfortably won in three out of four states that went to the polls, beating the exit polls." The BJP retained Madhya Pradesh (MP) with a strong two-thirds majority and comfortably reclaimed Rajasthan and Chhattisgarh from the Congress. In MP, Rajasthan, and Chhattisgarh, the BJP and Congress have 8.2%, 2.2%, and 4.2% of the vote, respectively. In Telangana, the Congress defeated the BRS by a narrow margin. As a result, the verdict is in for all four states. These four states account for 75 Lok Sabha seats (out of a total of 544)."
According to the brokerage, the state assembly results, dubbed a "semi-final" to the upcoming May 24 Lok Sabha elections, will bring market comfort in terms of political stability. The incumbent BJP's performance in avoiding anti-incumbency and maintaining a large state like MP (5th consecutive term) while regaining Rajasthan and Chhattisgarh should give a nice tailwind for the 2024 general elections.
"Equity markets were understandably concerned about the outcome of state elections and what it might mean for the general elections in 2024." With the outcome decisively in favour of the incumbent BJP, market confidence in the current regime and political continuity after the 2024 Lok Sabha elections would increase. This bodes well for India's macroeconomic and policy momentum, which is now seeing the greatest growth among major nations (both GDP and corporate earnings)," according to the Motilal Oswal research.
Stock market Outlook
When asked about the future for the Indian stock market following the assembly election results, Motilal Oswal replied, "India's macro and micro fundamentals remain pretty solid, as evidenced by the following factors: (1) 7.7% real GDP growth in 1HFY24, driven by a strong performance in the manufacturing and investment sectors. (2) Strong corporate earnings: Nifty generated 30% earnings growth in 1HFY24 and is on track for a robust 20% earnings increase in FY24. (3) The profits momentum continues post-2QFY24, with excellent high-frequency data points (GST collections, car monthly numbers, power demand, PMI data) in Oct-Nov'23. (4) Positive global macroeconomics, with rates peaking, Brent crude in a benign range of USD80 per barrel, and steady bond yields; and 5) favorable valuations, with the Nifty trading at 17.8x FY25E EPS, well below its long-term average of 20x."
Stocks to purchase right now
When asked which sectors would produce equities with alpha potential following the assembly elections in 2023, the brokerage stated, "We like BFSI, Industrials, Real Estate, Auto, and Consumer Discretionary."
Motilal Oswal selected the following stocks to purchase in the large-cap and mid-cap segments after state assembly elections in 2023:
Buy SBI, Axis Bank, M&M, Hero Honda, L&T, ULTRATECH, TITAN, and Indian Hotels. Godrej Properties, LemonTree, Sunteck Realty, PNB Housing, Angel One, and Global Health are some mid-cap stocks to consider.
