International brokerage CLSA identified 54 companies that will be direct beneficiaries of the current government’s policies. Half of these are PSU shares.
These firms are from capex and infrastructure-linked sectors, PSUs, or stocks of some corporate houses. The brokerage has named these as “Modi stocks,” since they have been rallying based on prospects of the BJP coming back to power.
In its India strategy note, CLSA said 90 per cent of Modi stocks have outperformed the market against 42 per cent of other stocks. It sees this outperformance to continue in the case of strong election results in favour of the BJP.
The past six months have seen an election-focused rally wherein 90 per cent of the “Modi stocks” have outperformed the Nifty. This trend is likely to continue, particularly if the incumbent government returns with a strong majority, said the brokerage.
#CNBCTV18Market | CLSA says 54 cos, mostly PSUs can be direct beneficiaries of current govt’s policies, adding that PSU rally may continue if current govt is back to power with healthy majority pic.twitter.com/ozugg2H8KT— CNBC-TV18 (@CNBCTV18Live) May 29, 2024
The CLSA list included Reliance Industries Ltd, Larsen & Toubro Ltd, NTPC Ltd, NHPC Ltd and Power Finance Corporation Ltd. Others in the list included Bharti Airtel Ltd, Mahanagar Gas, Indus Towers, Ashok Leyland and UltraTech Cement.
CLSA, as per CNBC TV 18, sees banks as best risk-reward in India growth play in H2FY25. It prefers HDFC Bank, ICICI Bank, Axis bank and IndusInd Bank.
It also likes Bajaj Finance, Max Financial, Zomato and Avenue Supermarts (DMart), as per reports.
The clear pushback on rate-cut expectations has allowed American banks to outperform year-to-date, contrasting with the underperformance of Indian private banks, which have been laggards.
CLSA predicted that PSU stocks could continue to rise until June or July, ahead of the budget announcement.
This increase may be driven by a narrow, election-themed rally expected to taper off by mid-year. Following the elections, investors could face a “reality check”, said the global brokerage. A similar historical pattern was observed in the last two elections, where PSUs topped-out following the results.
Other stocks that have been highlighted by CLSA’s analysts are Ashok Leyland, UltraTech, and L&T. Additionally, CLSA has expressed positivity in Bajaj Finance, Max Financials, Zomato, and DMart. Among the telecom-related sectors, Bharti Airtel, Indus Towers, and Reliance Industries stand out as the top picks.
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