Nifty, stocks and sectors: What to expect from markets if NDA govt returns to power

Maintaining a bullish view on the Indian equity markets, brokerage firm Prabhudas Lilladher believes that the benchmark NSE Nifty index may rally around 14% in the next 12 months if Prime Minister Narendra Modi-led NDA government comes to power again for the third consecutive time. The brokerage has set the 12-month target for Nifty at around 25,700-mark. The 50-share index was hovering at around 22,550 on April 25.

The financial services firm, in a webinar on April 25, said that in the last 10 years, the country has seen a continuation of policies, much more spending on social schemes, and an attempt to improve the bottom end of the pyramid.

“Economy and markets have thrived both under the National Democratic Alliance (NDA) and United Progressive Alliance (UPA) governments. However, NDA scores in implementing key reforms, focus on infrastructure development and inclusive growth,” Prabhudas Lilladher said, adding that overall, the economy is likely to well. Sector-wise, the brokerage is positive on banks, capital goods, defence, automobiles, engineering, and new energy, among others.

Prabhudas Lilladher added that cement and metal sectors will also benefit if the country gets a stable verdict. “Current strong pace of infrastructure development will continue leading demand generation for cement and metals,” it said. It added that both sectors have been growing at 7-9% per annum.

According to Prabhudas Lialladher, with a higher focus on infrastructure, volumes can grow at 9-12% easily. “A stable government will lead to a higher probability of better GDP growth due to industry-focused policies. Higher GDP will propel overall strong sectoral growth in autos, construction, manufacturing, and realty aiding volume growth to metals and cement sectors,” the brokerage said.

It also added that the production-linked incentive (PLI) scheme is much awaited for specialty chemicals. The boost to the production of chemicals, aligned with new or renewable energy, could gather pace. “Establishment of petrochemicals or chemical parks or investment zone could get into focus if the government comes to power again,” it said.

Sharing its view on foreign portfolio investors (FPIs), Prabhudas Lilladher said that the inflows will also get the boost if the current regime continues. However, in the near term, the significant increase in FPIs will depend on the geopolitical situation, global interest rates, global macroeconomic situation, and valuations.

For stock-specific investors, the brokerage suggests Titagarh Wagon from the railway space, Bharat Electronics and BEML from the defence space, Suzlon and Inox from the renewable sector, and ABB, Hitachi and Apar Industries from the power sector.