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Effect of Elections on Stock Market: Top Stocks to Grow
Table of Contents
Introduction to Election Impact on Stock Market
Hello everyone, how are you all? The current buzz is all about BJP and Congress. BJP supporters are confident about BJP's victory, while Congress supporters believe Congress will win. However, as stock market enthusiasts, our focus should be on market trends and setting targets.
Whether it's BJP or Congress, neither will give us money directly. We need to earn it through our hard work and strategic investments. Let's dive into the analysis and understand which stocks we should focus on during election results.
CLSA Report on Election Impact
A report from CLSA, a global brokerage firm, indicates that if the BJP government comes to power, certain companies can benefit significantly from government policies. The government has been heavily investing in renewables, infrastructure, railways, defense, and public sector undertakings (PSUs) over the past five years.
Exit polls will be released on June 1st, and the results will be announced on June 4th. Regardless of the outcome, our focus should remain on market strategies and stock selection.
Public Sector Companies to Watch
CLSA has identified 54 public sector companies that could benefit from the continuation of current policies. These companies are expected to increase capital expenditure (capex) in infrastructure-linked sectors, which is crucial for economic strength. These stocks are termed "Modi Stocks" by the brokerage firm.
Here are some of the key public sector companies to watch:
- Larsen & Toubro (L&T)
- NTPC
- NHPC
- Power Finance Corporation (PFC)
- Oil and Natural Gas Corporation (ONGC)
- Indraprastha Gas Limited (IGL)
Market Phases and Election Theme
The election theme-based boom is expected to end by June-July. Currently, the market is influenced by two factors: elections and the upcoming budget. Post-election, the real picture will become clear during the budget presentation, which will outline government plans and allocations.
It's essential to understand that the market will go through two phases: the first phase influenced by elections and the second phase by the budget. There will be a drop phase in between, providing a reality check. Managing this drop phase is crucial for long-term success.
Focus on Government Policies
Stocks that benefit from government policies will see significant growth. It's advisable to keep an eye on government shares rather than private ones. Some highlighted stocks include:
- Ashok Leyland
- Ultratech
- Larsen & Toubro (L&T)
- Bajaj Finance
- Max Financial
- Zomato
- DMart
- Bharti Airtel
- Indus Tower
Strategic Stock Selection
While the CLSA report provides valuable insights, it's crucial not to buy or sell stocks blindly based on their recommendations. Understand their perspective and make informed decisions about which direction to take.
For those with a list of stocks, follow these two steps:
- Understand the point of view
- Make informed decisions
We have shared the names of important shares to help you benefit from this information. Government banks should remain on your radar as they are expected to perform well.
Conclusion
In conclusion, the stock market is heavily influenced by election results and subsequent government policies. While BJP and Congress supporters debate over the potential winner, our focus should remain on strategic investments in stocks that are likely to benefit from government policies.
Keep an eye on public sector companies, manage market phases wisely, and make informed decisions to maximize your returns. If you find this information valuable, share it with others and stay tuned for more updates.
Disclaimer: This Stocks analysis is only for informational purposes and should not be considered as investment advice. Always do your research and consult with a financial advisor.
Frequently Asked Questions
The stock market is influenced by election results as they can lead to changes in government policies which affect various sectors differently. Investors focus on potential policy changes and their implications on sectors like infrastructure, defense, and public sector undertakings (PSUs).
According to the CLSA report, sectors such as renewables, infrastructure, railways, defense, and PSUs are expected to benefit significantly from the continuation of the BJP government’s policies.
Some of the key public sector companies to keep an eye on include Larsen & Toubro (L&T), NTPC, NHPC, Power Finance Corporation (PFC), Oil and Natural Gas Corporation (ONGC), and Indraprastha Gas Limited (IGL).
Investors should be aware of two main phases: the election-influenced phase and the budget-influenced phase. There will be a transition or "drop phase" in between these phases, which provides a reality check on market expectations.
Investors should focus on stocks that are likely to benefit from government policies. It’s important to understand the perspectives provided by reports such as those from CLSA and make informed decisions rather than making impulsive moves. Public sector companies and government banks should be on the radar for potential growth.
