Where to invest on Lok Sabha election result day? You can bet on these stocks today

The Lok Sabha Election 2019 counting will at 8 am today and in the next few hours, we will have a clear picture of who is going to be the next Prime Minister. The markets are already cheering with exit polls indicating a win for NDA government led by current PM Narendra Modi. The investors can use this opportunity to buy right stocks and increase their returns. Past data has showcased good rally on and post election day. Hence, grabbing key stocks can mean value investment for investors.  

Lavina Quadros, Equity Analyst at Jefferies said, “We see 23 May as a binary event and a decisive majority for the current government (NDA) would be viewed as the better outcome. Defence, roads and renewable energy saw a pick-up in announcements and execution post 2014 elections. Industrial companies’ execution and order flow have improved, but 2019 has not seen the pre-election rally of 2014. We expect a strong post election rally if the current government returns, as the election has been an overhang.”

According to Quadros, here’s a list of stocks that can perform well on Dalal Street -

Indigenisation in defence still has more legs – L&T, Bharat Electronics and Bharat Earth Movers key players: 2014 elections benefitted domestic defence companies materially, as the government focused on reducing imports to 30% from 70% levels. 72% of immediate requirements were slated for domestic manufacturing. Absolute defence spend did not rise as much, but the market share of domestic companies improved. In the past two years, reforms have slowed down, as a new minister was appointed and elections became the focus. Post 2019 elections, we believe close to USD10 bn of projects should be awarded once the new cabinet is formed.

Road execution per day up from 11km in 2014 to 30 km in 2019 – L&T, Nagarjuna Construction, Sadhbhav the industry players: The road sector saw a spate of policy announcements in the two years following the 2014 elections. Commentary has remained strong even in 2018-19, with the minister focused on further scaling up to 41 km/day construction. Land acquisition has been dealt with smoothly for contractors, with projects being awarded only if 80% land is under possession. We expect this momentum to continue if the current government returns.

Ports and shipping the next wave – Adani Ports, L&T the key beneficiaries: Commentary on port modernisation and coastal shipping has increased 2017 onwards. Renewed focus on Sagarmala project, which will promote port-led industrialisation, has returned. It is an area that did reasonably well in the past five years in terms of improving ease of operations. We believe a faster pace of implementation will be the next step if the current government returns to power.

DFC execution sees pick-up; railways disappointing progress – ConCor, Gateway the beneficiaries: The Ministry of Railways saw two ministers take charge in the past fiveyear period. However, neither was really able to implement the sizeable capex planned for railway modernisation and augmentation. Tenders were delayed. Cap on freight tariffs post 2016 steep 20% hike was the only saving grace. We are not optimistic that this would change even if the incumbent returns, as there has been no commentary on uptick here even in 2018-19. Dedicated Freight Corridor (DFC) execution ramp-up has been a positive.

Quadros said, “Our top picks, L&T, ABB, Voltas, KEI, NTPC, ConCor and Gateway, have earnings visibility for the next 12-18 months, which should lead to upside even in the event of election volatility.”

On Wednesday, the Sensex finished at 39,110.21 up by 140.41 points or 0.36%, whereas the Nifty 50 completed at 11,737.90 above 28.80 points or 0.25%.