L&T, HAL, UltraTech, among 32 top stock picks of PhillipCapital after state elections; check full list
Top picks stocks: Following four state elections, brokerage house PhillipCapital has selected 32 stocks as its top picks. These stocks include Larsen & Toubro (L&T), Hindustan Aeronautics (HAL), GET&D, UltraTech Cement, ACC, JSW Steel, Maruti, Tata Motors, Hero MotoCorp, ICICI Bank, Bajaj Finance, Axis Bank, PFC, Shriram Housing Finance, Muthoot Finance, Havells, Kaynes, PG Electroplast, Dr. Reddy, Zydus Life, LTIMindtree, SBI Life, ICICI Lombard, Nippon Asset Management, Coromandel, Deepak Fertilisers, Gateway Distriparks, Mahindra Logistics, and PNC Infra.
In its report, the brokerage expressed optimism about the industrial (defence and capital goods), cement, metals/pipes, automotive, and EMS sectors, while maintaining a well-diversified position in other industries (financials, pharmaceuticals,, discretionary, and staples).
It expects this segment to fare better as the BJP is expected to gradually focus more on welfare schemes in the run-up to the union elections. Rural demand has been weak due to inflationary pressures and a lack of incremental growth triggers.
“We expect a balanced approach between revenue and capital expenditure, retaining fiscal math,” PhillipCapital said in its report.
The actual results showed a landslide victory for the Bharatiya Janata Party (BJP) in three states (MP, Rajasthan, and Chhattisgarh), with Congress winning Telangana. While exit polls indicated the BJP had an advantage in MP, there was no clear mandate in Rajasthan, and the Congress had won in Chhattisgarh and Telangana. In contrast to pre-election expectations (a very tight position for the BJP), the exit polls themselves were a welcome surprise.
The brokerage claims that the BJP will benefit greatly from this election mandate in the run-up to the April–May 2024 national elections. The results of the state elections strengthen its position, even though the brokerage house did not believe that the BJP would lose the national elections.
This will guarantee improved state development (with MP and Rajasthan being two of India’s largest states, and BJP firmly established in Gujarat and UP), continuity and/or an increase in the effectiveness of central and state government policies, and advancements in economic growth. This will lead to a strong earnings retention.
The brokerage added that in recent years, there have been significant domestic flows and investments in equities. This is probably going to keep happening. The brokerage has long been supportive of the India Growth Story and still is.
“We have been positive on Indian equities since clarity emerged on US interest rates peaking after the release of Oct’23 CPI, prior to that we expected Nifty to be rangebound. Our optimism was further enhanced post India’s Q2 GDP data at 7.4%, post which we have upgraded FY24 GDP to 7-7.5% (most optimistic on street).
Today’s state election outcome will lead to greater confidence on continuity of BJP government at the centre which will drive markets higher. We are now quite positive on equities due to fundamental and liquidity strength, our FY24/25 Nifty EPS growth stands at 18%/18%,” the brokerage explained in its report.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
