SBI, M&M, Axis Bank to LT: Motilal Oswal recommends 14 stocks to buy after BJP win in assembly elections

Stocks to buy today: After comfortable victory of the Bhartiya Janata Party (BJP) in Madhya Pradesh, Rajasthan and Chhittorgarh, stock market experts are expecting big upside in stock market today. They are of the opinion that Nifty 50 hit record high of 20,291 on Friday after pro-BJP exit polls. So, when the BJP has won a comfortable majority in Hindi hartland states, chances are very high for the Indian stock market to extend its participatory rally witnessed on Friday last week.

As per Motilal Oswal report, "As per the state assembly election results, the BJP has comfortably won in three out of four states that went under the polls, beating the exit polls. The BJP has retained Madhya Pradesh (MP) with a strong two-thirds majority, and regained Rajasthan and Chhattisgarh from the Congress with a comfortable majority. Vote share difference between the BJP and the Congress in MP, Rajasthan and Chhattisgarh stands at 8.2%, 2.2% and 4.2%, respectively. In Telangana, the Congress has defeated the BRS by a thin majority. Thus, the verdict is clear for all four states. These four states together account for 75 Loksabha seats (out of 544)."

Teh brokerage said that the state assembly results, branded as a semi-final to the forthcoming May’24 Lok Sabha elections, will provide comfort to the markets as far as political stability is concerned. The incumbent BJP’s performance in avoiding anti-incumbency and retaining a big state like MP (5th consecutive term) while managing to regain Rajasthan and Chhattisgarh should provide them with a good tailwind for the 2024 general elections.

"Equity markets were justifiably anxious about the outcome of state polls and what it portends for the 2024 general elections. With the outcome overwhelmingly in favor of the incumbent BJP, the confidence of the market in the current dispensation and political continuity post 2024 Loksabha elections will get a boost. This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies (both GDP as well as corporate earnings)," Motilal Oswal report said.

Outlook for stock market

Asked about Indian stock market outlook after assembly election results, Motilal Oswal report said, "India’s macro and micro fundamentals remain quite strong as indicated by the following factors: (1) 7.7% real GDP growth in 1HFY24 led by a robust print in manufacturing and investment sectors. (2) Solid corporate earnings: Nifty has delivered 1HFY24 earnings growth of 30% and is poised for a healthy 20% FY24 earnings growth. (3) The earnings momentum continues post 2QFY24 as well with Oct-Nov’23 seeing good high-frequency data points (GST collections, auto monthly numbers, power demand, PMI data). (4) Supportive global macros with rates peaking out, Brent crude in a benign range of USD80 per barrel and stable bond yields; and 5) last but not least, attractive valuations with Nifty trading at 17.8x FY25E EPS, below its long-period average of 20x."

Stocks to buy today

Asked about the sectors that may deliver stocks that can generate alpha return after assembly elections 2023, the brokerage said, "We like BFSI, Industrials, Real Estate, Auto and Consumer Discretionary."

Segregating its stock picks after state asembly elections 2023, Motilal Oswal listed out following stocks to buy in large-cap and mid-cap segments:

Large-cap stocks to buy: SBI, Axis Bank, M&M, Hero Honda, L&T, ULTRATECH, TITAN, Indian Hotels.

Mid-cap stocks to buy: Godrej Properties, LemonTree, Sunteck Realty, PNB Housing, Angel One, Global Health.

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.