Motilal Oswal Securities in its latest strategy note cited various opinion polls to suggest BJP may retain power for the third consecutive term with a full majority. Motilal Oswal said BJP's Sankalpa Patra (Manifesto) titled “Modi ki Guarantee 2024”, unveiled by the Prime Minister Narendra Modi, reflects the confidence of the current dispensation to return to power and thus refrains from any meaningful freebies, which would have extracted a fiscal cost.
It said India is in a mini-Goldilocks set-up, thanks to solid macro (GDP, inflation, CAD, stable currency) and resilient micros (corporate earnings). Besides, the expectations of political continuity with an acceleration in policy momentum (as promised in the BJP manifesto) in the potential third term of the BJP under PM Modi augur well for stock markets for the short to medium term, the domestic brokerage said.
A present, Nifty is trading well within its long-period average PE of 20 times FY25E EPS. Motilal Oswal said it continued to stay 'overweight' on domestic cyclicals such as BFSI, industrials, real estate and consumer discretionary, It maintained its underweight on IT with Equal Weight on Healthcare, Automobile, Metals, O&G and Telecom.
Among large cap stocks, Motilal Oswal prefers stocks such as ICICI Bank Ltd, State Bank of India (SBI), Larsen & Toubro (L&T), Titan Company Ltd, ITC Ltd, HCL Technologies Ltd, Coal India Ltd, Mahindra & Mahindra (M&M), Zomato Ltd and Hindalco Industries Ltd.
Among mid cap stocks, it like Indian Hotels Ltd, Godrej Properties Ltd, Global Health Ltd, PNB Housing, KOEL, Cello World, Sobha Ltd, Lemon Tree Hotel Ltd, KEI Industries Ltd and JK Cement Ltd.
The Modi-led BJP in its 2024 manifesto emphasised policy continuity, better execution and widening the scope of existing priorities (Housing, Ayushman Bharat, Physical and Digital Infrastructure), along with some big-bang political agenda, such as Uniform Civil Code, Implementation of Citizenship Amendment Act and One Nation, One Election.
"The manifesto focuses on broadbased development through various government programs and initiatives that will
have socio-economic impacts. Infrastructure development (Roads, Railways, Airports, Metros, Inland Waterways, Shipping), manufacturing (developing India as Global Manufacturing Hub) and capex will remain the key priorities. On the social front, the BJP plans to continue to provide free ration for the next five years under PMGKAY, double the limit of Mudra loans to INR2m and expand the scope of Ayushman Bharat to cover senior citizens," Motilal Oswal said.
The manifesto also mentions the “Neo Middle Class” population and emphasises providing them with quality healthcare and education, along with fulfilling their dream of owning a home.
"Key economic proposals include the focus on building India as a key manufacturing hub (Electronics, Defense, Aviation, Railways, Renewable Energy), strengthening digital and physical infrastructure, and empowering MSMEs. Providing piped natural gas connections to all major cities and towns is outlined as another priority," Motilal Oswal said.
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