Budget 2024: Why experts are bullish on PSU bank stocks after assembly election results — explained

Budget 2024: Cheering BJP's victory in state assembly elections, Indian stock market extended bull trend for yet another session on Monday. In a surprise move, Bank Nifty surged over 1600 points and climbd to a new peak of 46,484 levls during Monday deals. 

According to stock market experts, investors are seeing these assembly results as cue to continuation of government policies as the poll outcome has put BJP in the driver's seat ahead of Lok Sabha elections expected in May 2024. They said that confidence of the central government is expected to become visible in upcoming union budget in February 2024.

Stock market experts maintained that focus of the union government on profitability of PSU companies and state-owned banks is expected to remain in focus and teh incumbent government may walk some extra mile in upcoming union budget. They said that Bank Nifty rallying over 1600 points in second half of Monday session is a glaring example of it.

Budget 2024 in focus

On how this assembly poll outcome would impact upcoming union budget 2024, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "After this positive poll outcome, market is expecting advantage BJP in upcoming Lok Sabha elections 2024. So, government policies are expected to continue with some extra speed, which may reflect in upcoming union budget in February next year. Though, it would be a vote on account, but focus on infrastructure expenditure and maintaining the profitability of state-owned companies and banks may get some booster dose when the Union Finance Minister Nirmala Sitharaman presents her vote on account in the parliament. So, uptrend in PSU bank shares is expected to continue ahead of union budget 2024."

Why you should buy PSU bank shares?

Expecting momentum in infrastructure, PSU and banking stocks post-assembly election results, Rajesh Sinha, Sr. Research Analyst at Bonanza Portfolio said, "After BJP's triumph in three states, infrastructure, PSU and banking stocks are expected to see good momentum as we believe that the central government will announce more infrastructural development projects, more contracts to be awarded to the PSU companies. The election result also ensures that there will no further hike in aggressive welfare-spending to woos voters and the same money will be used for planned infra expenditure to reach $5 trillion economy."

On why PSU bank and infra stocks will be in focus ahead of budget 2024, Anirudh Garg, Partner and Head of Research at Invasset PMS said, "The recent BJP victories in three significant states send a clear signal that the Modi government is poised for a third term in the upcoming 2024 general elections. This development has initiated what can be termed an "old economy run," characterized by Capex Expansion and a rise in commodity prices, assuming that global growth and inflation remain within controlled ranges." He said that another crucial aspect is the government's commitment to providing the necessary autonomy for Public Sector Undertakings (PSUs) to thrive and excel.

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"Regarding PSU banks, they have long been poised for growth, primarily because they are corporate lenders. Their fortunes are closely tied to the health of the sectors they lend to. With sectors now in good health and the NPA (Non-Performing Asset) issue largely resolved through measures like the National Company Law Tribunal (NCLT) and the Insolvency and Bankruptcy Code (IBC), PSU banks are in a favourable position. We hold a bullish outlook on PSU banks, as they stand to reap the rewards of a forward-looking government's policies," Anirudh Garg said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.