As the Lok Sabha elections progress, Phillip Capital has projected a strong likelihood of the BJP-led NDA securing victory in 2024. The brokerage firm advises investors to capitalize on market corrections, citing the probability of sustained political stability.
“Assuming a stable alliance under Modi’s leadership for the next five years, we recommend buying equities on a steep correction. We do not see any chance of a non-NDA government coming to power,” the firm stated.
Voter Turnout Concerns Deemed Overblown
Phillip Capital asserts that concerns about low voter turnout are exaggerated. The decline in turnout is not attributed to any specific party, with even Congress and YSRCP experiencing reduced participation in numerous constituencies.
The average voter turnout stands at 65.5 per cent based on data from the first six phases, slightly lower than the 67.4 per cent in 2019. Specifically, in constituencies where voting is complete, the turnout is marginally lower at 66.4 per cent compared to 67.8 per cent in 2019.
Analysis of Constituency Voting Patterns
Out of 485 constituencies where voting is concluded, 155 saw higher participation, while 330 experienced lower turnout. Among these, 279 are BJP-ruled constituencies, with 192 witnessing a decrease in turnout. Notably, six constituencies in Madhya Pradesh, Uttar Pradesh, and Arunachal Pradesh saw a 10-percentage point reduction.
Phillip Capital outlines three scenarios for the election outcome, all favouring an NDA victory:
Base Case: BJP wins 290-300 seats, with the NDA securing 330-340 seats. This scenario is expected to have a positive impact on equities, earnings, and the economy due to policy continuity and execution.
Bullish Scenario: BJP secures more than 325 seats, resulting in over 360 seats for the NDA, likely leading to a sharp rise in equities.
Bearish Scenario: BJP falls short of a majority, but the NDA forms a government under Narendra Modi. This may cause a significant sell-off in equities.
Sector Recommendations and Top Stock Picks
Assuming the base-case scenario, Phillip Capital remains optimistic about sectors such as automation, EVs, defence, railways, logistics, ports, roads, real estate, metals, cement, energy, and financials. The firm favours cyclical sectors over consumer spaces from a long-term perspective.
Top Picks for One Year:
SBI, Bank of Baroda, Canara Bank, PFC, REC, Shriram Finance, Muthoot Finance
UltraTech, Siemens, Hero MotoCorp, TVS Motor
Divi’s Labs, Syngene, APL Apollo, Jindal SAW, IGL, Aarti Industries, Vinati Organics, Praj, Gokaldas Export (NR), SP Apparel (NR)
Top Picks for Two to Three Years:
HDFC Bank, ICICI Bank, SBI, Kotak Mahindra Bank, Bajaj Finance, Sundaram Finance (NR), MAS Financial (NR)
Infosys, HCL Tech, Persistent, KPIT Tech, Rategain
Reliance (NR), GAIL, Ambuja Cements, JK Cement, L&T, Bharti (NR)
Sun Pharma, Divi’s Labs, Syngene, Coal India (NR)
JSW Steel, Jindal Stainless, Maruti, Bharat Forge, Ashok Leyland
Concor, NCC, PNC Infra, Gateway Distriparks
SRF, Aarti Industries, Navin Fluorine, PI Industries, Coromandel, Dhanuka Agritech
Phillip Capital’s recommendations highlight confidence in the current political scenario and the potential for robust market performance in the upcoming years.
