Cyclical sectors like banks, industrial, mid-caps to see better investor sentiment post election results: Jefferies | Mint
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Business News/ Markets / Stock Markets/  Cyclical sectors like banks, industrial, mid-caps to see better investor sentiment post election results: Jefferies
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Cyclical sectors like banks, industrial, mid-caps to see better investor sentiment post election results: Jefferies

Jefferies reports that the BJP's strong showing in the state elections indicates a potential win in the 2024 national elections. Investor sentiment is expected to improve, benefiting sectors such as banks, industrial, power, property, and mid-caps.

The improved investor sentiment following the BJP's strong showing in state polls is expected to benefit domestic cyclical sectors, including banks, industrial, power, property, and mid-caps: Jefferies.Premium
The improved investor sentiment following the BJP's strong showing in state polls is expected to benefit domestic cyclical sectors, including banks, industrial, power, property, and mid-caps: Jefferies.

The results of the three state elections for the Bharatiya Janata Party (BJP)—Madhya Pradesh (MP), Rajasthan, and Chhattisgarh—were substantially better than exit polls indicated, said global brokerage Jefferies in its report. This confirmed the general consensus that Modi would win the 2024 national elections, with the BJP likely to win more than 300 seats. Positive signs for domestic cyclical sectors such as banks, industrial, power, property, and mid-caps should result from this improvement in investor sentiment. There is also a blatant display of competitive populism from the Congress and BJP, according to Jefferies. 

Partly due to its anticipation of the BJP's strong showing in state polls, the global brokerage recently allocated the cash in its model portfolio. The international brokerage added Coal India, Honasa, Eicher, NTPC, HDFC Bank & ICICI Prudential Life Insurance at the cost of cash, Marico, Maruti Suzuki, Power Grid Corporation of India, NBFC.

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Also Read: L&T, HAL, UltraTech, among 32 top stock picks of PhillipCapital after state elections; check full list

"The welfare announcements should help the "Bottom of Pyramid" (BoP) demand recovery where we prefer Telecom and 2Ws over staples. Our clear preference remains to play the cyclical story via power, industrials, property, banks and select mid-caps - as we believe the unfolding private capex cycle (corporate + housing) is strong and durable turnaround, not impacted by potential government capital expenditure (capex) slowdown," the brokerage said.

Also Read: Coal India, ICICI Bank amongst key Nifty gainers as Banks, Financials, Metals, Oil & Gas index lead the market rally

The brokerage went on to say that the Congress and the BJP both made an effort to win over voters by giving away free things, especially to Below Poverty Line (BPL) households. Some common promises include income transfers to married women ( 10k/year in Rajasthan by the Congress, 1,250/month in MP by the BJP) and landless farmers ( 10k/year by the BJP & Congress in Chattisgarh); farm loan waivers (all states by the Congress, interest waiver in MP by the BJP); subsidies on cooking fuel ( 300–500/cylinder by all parties) & electricity bills (free 100–200 units/month); one-time grants (10gm Gold on marriage), etc.

Also Read: Stellar rally! Nifty 50 jumps 1,159 points in just 13 sessions

“BJP's strong performance in state polls notwithstanding, we believe that the tilt to welfare policies should gain momentum in run up to Apr-May 24 polls. The upcoming budget may have some large new welfare scheme announcements, similar to the farmers direct income transfer announced before 2019 polls," said Jefferies in its report. 

Also Read: Defence, railway stocks surge after BJP's state election victory; HAL, BEL, Ircon hit 52-week high

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

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Published: 04 Dec 2023, 02:12 PM IST
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