Will Indian share market continue to correct before Lok Sabha election 2024 result? Experts list out 28 stocks to buy
Indian stock market benchmarks, Sensex and Nifty 50, trade cautiously as Lok Sabha election 2024 outcome nears. Volatility persists in May. Experts do not expect major correction till election outcome on June 4.
The Indian stock market benchmarks, the Sensex and the Nifty 50 continued to trade in a range on Wednesday, May 22, indicating caution as the Lok Sabha election 2024 outcome day draws closer.
The domestic market has been experiencing significant volatility in May so far, reacting to reports and speculations about low voter turnout and the potential election outcome. Sensex and Nifty 50 are down by up to half a per cent this month.
The final two phases of the seven-phase Lok Sabha election 2024 are scheduled for May 25 and June 1. Vote counting will begin on June 4, with the final results expected by the evening of the same day.
No major correction till the election outcome
Experts anticipate that the Indian stock market will remain volatile until the final phase of the election on June 1. However, they do not expect the market to see a major correction in the run-up to the election outcome.
"Looking ahead to the Lok Sabha election outcome, it seems the market is set to continue its trajectory without major corrections, given that the markets are already factoring in the results. Despite recent declines due to foreign investor sell-offs, significant corrections are unlikely unless there is a major event," said Trivesh D., COO at Tradejini.
"Though we do not foresee a major correction in markets till the Lok Sabha elections, we do not rule out increased volatility. We sense that markets have priced in a win for the ruling government, with the actual number of seats expected to result in a sentimental reaction in the short term," said Manish Chowdhury, Head of Research, StoxBox.
After the election, the market mood will be influenced by central banks' monetary policy decisions, geopolitical developments and the Union Budget in July.
Vishnu Kant Upadhyay, Assistant Vice President - Research and Advisory at Master Capital Services, anticipates heightened market volatility until the election results are announced. However, he does not expect a significant market correction due to strong fundamentals.
Upadhyay said the Nifty 50 has been oscillating within a broad horizontal band of 21,800 to 22,800. The overall market sentiment remains bullish, favouring a ‘buy the dip’ strategy.
Any correctional fall below 21,800 should contain around 21,500 and then 21,200, where fresh buying opportunities may emerge, according to Upadhyay.
Deven Mehata, an equity research analyst at Choice Broking, pointed out that the Nifty 50 is currently reflecting a strong recovery from the support range of 21,800-21,700 levels. This bounce back indicates robust buying interest at lower levels, suggesting a positive sentiment in the market.
On the higher side, the index has a resistance near 22,800, which is close to its all-time high. This level will be crucial as it might act as a barrier to further upward movement.
Mehata said if Nifty 50 declines before the Lok Sabha election outcome, it could present a buying opportunity in the 22,200-22,000 levels range, provided a strict stop loss at 21,800 levels on a closing basis is maintained.
On the other hand, should Nifty surpass its all-time high resistance of 22,800, the index has the potential to rally towards the 23,200 level ahead of the Lok Sabha election results, Mehata said.
Sandeep Raina, Executive Vice President-Research at Nuvama Professional Clients Group, does not foresee any wild movement in the market.
"Many investors may remain cautious or wait until after the results are announced to make decisions, as these results will provide a clearer trend. Nonetheless, corporate earnings will be of the utmost importance, with stock movements driven primarily by these results. We prefer to invest in the capex sector, such as power, renewables, defence, water, and capital goods," said Raina.
Stocks to buy
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market is likely to respond to the election outcome before June 4th.
Vijayakumar said investors can consider buying stocks before the results. Priority can be given to largecaps, which are fairly valued compared to the broader market, where valuations are much higher. A possibility around the election results time is both FIIs and DIIs turning buyers lifting the largecaps and the indexes to higher levels, he said.
Mint consulted several experts for their recommendations on stocks to buy on dips at this juncture. Here's what they said:
Manish Chowdhury, Head of Research, StoxBox
The medium—to long-term structure remains bullish. It is driven by a combination of macro and corporate earnings, which still offer good room for growth.
Chowdhury advises investors to reduce their risks ahead of the election results and focus on large caps, where the valuation still looks favourable.
His top picks, which can be considered at current levels and added on dips, include Asian Paints, Dabur, and Avenue Supermarts. Over a 12-month horizon, they may offer a potential upside of 20 per cent from current levels.
Deven Mehata, Equity Research Analyst, Choice Broking
Mehata recommends the following five stocks to buy on dips at the current juncture:
1. LIC on dips near ₹1,000 with a stop loss of ₹955 for the target of ₹1,090
2. TVS Motor Company on dips near ₹2,110 with a stop loss of ₹2,000 for the target of ₹2,310
3. Hindalco Industries on dips near ₹375 with a stop loss of ₹355 for the target of ₹420
4. SBI on dips near ₹810 with a stop loss of ₹780 for the target of ₹890
5. AXIS Bank on dips near ₹1,110 with a stop loss of ₹1,090 for the target of ₹1,200
CA Vatsal Vinchhi, Equity Analyst, Choice Equity Broking
Vinchhi recommends buying the following stocks from various sectors:
PSU banks: Bank of Baroda and Bank of India
Auto sector: Mahindra and Mahindra and Maruti Suzuki
Defence sector: Hindustan Aeronautics, Bharat Electronics, Bharat Dynamics and DCX Systems
FMCG: Hindustan Unilever, Marico and Varun Beverages
Vishnu Kant Upadhyay, Assistant Vice President - Research and Advisory at Master Capital Services
Upadhyay recommends buying DLF, Canara Bank, Tata Steel, Nippon Life India Asset Management and Tata Motors.
Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers
From the largecap space, Solanki recommends buying Hero MotoCorp (target price: ₹5,650), Balkrishna Industries (target price: ₹3,500) and SBI (target price: ₹942).
From the smallcap space, Solanki recommends buying Dalmia Bharat (target price: ₹2,406) and United Breweries (target price: ₹2,300).
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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