BSE PSU index zooms over 6% to all-time high as exit polls project BJP-led NDA’s victory

PSU stocks surged in today's trading session as exit polls project a clear victory for BJP-led NDA, hinting at Modi's potential third term. BSE PSU index hit a new all-time high.

A Ksheerasagar
Published3 Jun 2024, 12:26 PM IST
Power Finance Corporation, REC, and Power Grid Corporation shares soared to fresh record highs.
Power Finance Corporation, REC, and Power Grid Corporation shares soared to fresh record highs.(Pixabay)

Amidst expectations of sustained robust capital expenditure by the government across pivotal sectors like railways, defence, and power, PSU stocks skyrocketed in today's trading session. 

The surge in optimism among investors towards PSU companies was fueled by the release of exit polls, projecting a clear victory for the ruling NDA, signaling the potential for Prime Minister Narendra Modi's third consecutive term in office. The BSE PSU index, reflecting public sector enterprises' performance, surged by 6.4% in today's trade to record a new all-time high of 22,233 points.

In today's trading session, Power Finance Corporation emerged as the top gainer, surging by 13.30% to reach a new all-time high of 558 per share. Similarly, REC, another power financing stock, soared by 11.70% to achieve a fresh record high of 600 per share. Following suit, Power Grid Corporation shares also climbed by 12.50% to hit a new peak of 348.7 per share.

Also Read: Nifty PSU Bank rockets over 5% to record high; 5 stocks at new 52-week highs

This strong rally propelled the Power Grid market capitalisation beyond the 3 lakh crore mark for the first time. At the time of writing this report, all 56 constituents of the index were trading in the green.

Analysts had earlier indicated that a victory for Modi predicted in the exit polls, paving the way for his third term, could result in policy continuity, macroeconomic stability, and potential structural reforms. These factors are anticipated to have a positive impact on Indian financial markets.

The majority of exit polls indicated that the BJP-led NDA will comfortably secure between 350 and 390 seats of the 543 seats in the Lok Sabha, the lower house of India’s Parliament.

Also Read: Lok Sabha Elections 2024 trading strategy: Is Nifty 50 set to scale new heights after poll results?

A party or coalition needs 272 seats in the parliament to form a government. The BJP-led coalition, the National Democratic Alliance (NDA), is likely to cross this target, according to exit polls, which forecast it being close to taking about two-thirds of the seats.

The expectation that the BJP will come to power in the Lok Sabha elections was strengthened by its victory in three key state elections out of four in December. 

In a recent report, global brokerage house CLSA pointed out 54 'Modi stocks', primarily consisting of public sector undertakings, as direct beneficiaries of the current government's policies under Prime Minister Narendra Modi's leadership.

Also Read: Exit polls 2024 to GDP data - 4 reasons why Indian stock market is soaring

These stocks predominantly hail from the capex and infrastructure-linked sectors. CLSA forecasts that shares of India’s state-run companies, or PSUs, may reach their peak in June or July, ahead of the budget presentation by the incoming government, aligning with trends observed during previous general elections.

The roster of 'Modi stocks' identified by CLSA features prominent entities such as Larsen & Toubro (L&T), NTPC, NHPC, Power Finance Corporation (PFC), Oil and Natural Gas Corporation (ONGC), Indraprastha Gas Limited (IGL), Mahanagar Gas, Bharti Airtel, Indus Towers, and Reliance Industries (RIL).

Also Read: Exit Poll 2024: How to trade keeping Lok Sabha Election results in mind?

Moreover, CLSA underscored that over the past six months, 90 percent of the 'Modi stocks' have witnessed an election-focused surge, surpassing the Nifty index's performance. On average, these stocks have surged by 50 percent or more, compared to the Nifty's 14 percent uptick.

From a selection of 183 stocks, representing 30 percent of the futures and options universe, CLSA identified these 54 stocks, with only five of them displaying underperformance against the benchmark during this period.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.

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First Published:3 Jun 2024, 12:26 PM IST
HomeMarketsStock MarketsBSE PSU index zooms over 6% to all-time high as exit polls project BJP-led NDA’s victory

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