Economic news

Navigating India’s Electoral Ripples: Insights and Portfolio Strategies by Jefferi

2024.06.06 01:03

Navigating India's Electoral Ripples: Insights and Portfolio Strategies by Jefferi

The recent Indian election outcome has surprised many, with Prime Minister Modi’s party failing to secure a simple majority. Despite this unexpected turn, our analysis at Jefferies indicates a likelihood of a coalition government led by Mr. Modi. It maintains its stance on the housing-driven capital expenditure (capex) upcycle, but anticipates that the stock market will demand further evidence.

Drawing parallels to the 2004 scenario, Jefferies notes that extreme market reactions could potentially present buying opportunities. Our focus remains on large-cap companies that have lagged, offering attractive risk/reward profiles. Currently, it is overweight on private banks, consumer staples, and automotive original equipment manufacturers (OEMs), while reducing overweight positions on real estate, industrials, and public sector undertakings (PSUs).

Unlock the true value of stocks with InvestingPro+ by clicking here – your ultimate stock analysis tool! Say goodbye to inaccurate valuations and make informed investment decisions with precise intrinsic value calculations. Get it now at a limited-time discount of 10%.

The BJP’s setback, losing 63 seats and falling short of a simple majority with 240 seats, primarily stems from significant losses in five major states, notably Uttar Pradesh, Maharashtra, Rajasthan, Karnataka, and West Bengal. On the contrary, the Congress party has made substantial gains, securing 47 additional seats to reach a tally of 99. Additionally, the performance of NDA allies gains significance, with their combined seats inching them towards a slim majority. Notably, the roles of key allies like TDP and JDU will be pivotal, with their historical alliances with the NDA.

Despite the political shake-up, Jefferies anticipates a limited impact on the economy, with GDP growth likely to remain within the 6.5-7.0% range. Government initiatives in infrastructure spending and the ongoing housing boom have propelled corporate expenditure. While near-term risks may result in minor adjustments to earnings growth projections, it foresees continued support for corporate capex. Market dynamics may favor large-cap companies, market laggards, and quality private sector firms.

Drawing from the 2004 scenario, where the market initially dipped post-election results but later rebounded significantly, it anticipates a similar trajectory. As such, Jefferies has adjusted its model portfolio, reducing weightage in recent winners such as PSUs, select industrials, and realty. Conversely, it has increased exposure to rural recovery themes, adding stocks like HUL and M&M as proxies. Additionally, it has included HDFC Bank (NS:) and adjusted positions to align with potential government policy agnostic plays.

While the election outcome may have caused short-term volatility, strategic portfolio adjustments can position investors to capitalize on emerging opportunities in the evolving market landscape.

InvestingPro+ offers a range of other features, including ProTips, which provides concise fundamental information about companies, fair value assessments, financial health checks, and more. All these features are available at a limited-time discounted rate. Click here and avail 10% off and start maximizing profits with InvestingPro+ before the offer expires.

Read More: Unlocking Investment Potential via Fair Value

X (formerly, Twitter) – Aayush Khanna



Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 75,894.33 0.23%
vested-xor
Vested XOR (VXOR) $ 3,405.08 99,999.99%
ethereum
Ethereum (ETH) $ 2,879.30 5.35%
tether
Tether (USDT) $ 1.00 0.06%
solana
Solana (SOL) $ 195.05 3.95%
bnb
BNB (BNB) $ 597.10 0.62%
usd-coin
USDC (USDC) $ 0.999897 0.04%
xrp
XRP (XRP) $ 0.552971 1.50%
staked-ether
Lido Staked Ether (STETH) $ 2,877.90 5.31%
dogecoin
Dogecoin (DOGE) $ 0.191546 2.72%
cardano
Cardano (ADA) $ 0.396129 8.99%
tron
TRON (TRX) $ 0.160185 1.63%
the-open-network
Toncoin (TON) $ 4.88 1.76%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,412.38 5.72%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 75,814.31 0.41%
shiba-inu
Shiba Inu (SHIB) $ 0.000019 1.57%
avalanche-2
Avalanche (AVAX) $ 27.24 0.26%
weth
WETH (WETH) $ 2,879.40 5.39%
chainlink
Chainlink (LINK) $ 12.51 1.97%
bitcoin-cash
Bitcoin Cash (BCH) $ 377.37 0.56%
sui
Sui (SUI) $ 2.28 1.46%
polkadot
Polkadot (DOT) $ 4.13 0.31%
leo-token
LEO Token (LEO) $ 6.26 0.39%
usds
USDS (USDS) $ 1.00 0.11%
litecoin
Litecoin (LTC) $ 71.36 0.02%
uniswap
Uniswap (UNI) $ 8.86 6.98%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,027.44 5.33%
near
NEAR Protocol (NEAR) $ 4.21 1.28%
aptos
Aptos (APT) $ 9.73 0.37%
pepe
Pepe (PEPE) $ 0.000011 7.61%
bittensor
Bittensor (TAO) $ 506.02 3.75%
internet-computer
Internet Computer (ICP) $ 7.74 2.24%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.40 1.76%
dai
Dai (DAI) $ 0.999806 0.02%
stellar
Stellar (XLM) $ 0.101268 4.17%
ethereum-classic
Ethereum Classic (ETC) $ 20.15 2.47%
monero
Monero (XMR) $ 163.31 0.99%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.19%
kaspa
Kaspa (KAS) $ 0.112998 6.41%
whitebit
WhiteBIT Coin (WBT) $ 19.63 1.51%
aave
Aave (AAVE) $ 181.68 4.16%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.342972 2.10%
blockstack
Stacks (STX) $ 1.67 3.42%
crypto-com-chain
Cronos (CRO) $ 0.091067 5.95%
okb
OKB (OKB) $ 40.44 3.04%
first-digital-usd
First Digital USD (FDUSD) $ 1.00 0.13%
dogwifcoin
dogwifhat (WIF) $ 2.34 3.50%
arbitrum
Arbitrum (ARB) $ 0.577135 4.15%
mantle
Mantle (MNT) $ 0.665767 11.26%
filecoin
Filecoin (FIL) $ 3.75 0.37%