What to buy if Narendra Modi comes to power?



Riken Mehta
Moneycontrol.com


Follow me on Twitter @mehtariken

The judgement day is here and market is buzzing with various scenarios and probabilities of how many seats will the Modi led BJP and NDA alliance will be able to get in the Loka Sabha elections 2014. While most exit polls predict the formation of NDA led government with majority, markets will react to final numbers today. Prominent brokerage houses are out with their shopping list for investors if Narendra Modi comes to power. The consensus top stock recommendations by brokerages are  ICICI Bank, Axis Bank, SBI, L&T, Maruti and Reliance Industries.

CLSA 

CLSA in its note to clients said, “NDA will be able to form the next government without much trouble which will be positive for investment plays like ICICI bank, Axis, SBI and L&T. We expect market to remain in consolidation phase in the short term after election. The next government will have the difficult task of managing inflation, fiscal deficit and weak monsoon,” added CLSA.

Axis Capital 

Axis Capital recommends to buy Maruti, ICICI Bank, SBI, HDFC, L&T, Coal India and Sesa sterlite from the Nifty basket. The broking firm also advises to buy REC, PFC, Shriram transport, JSW Energy, Bajaj Finance, Eicher, Motherson Sumi and LIC Housing finance. Capital raising candidates like Aban Offshore, Adani Power, GMR Infra, GVK Power and Idea cellular are also likely to benefit from it.

Macquarie   

Macquarie expects the market rally to continue and in best case scenario market may see 15-20 percent upside. The brokerage house believes an absolute majority for NDA might lead to PE re-rating to 16-17 multiple from the current level of 14. Top picks are L&T , SBI , Axis bank , IRB and Adani Ports, said Macquarie.

Bank Of America Merrill Lynch 

Bank Of America Merrill Lynch expects another 8% return by year end. The broking house has year end target of 25500 on the Sensex. The growth will gradually recover to 5.4 percent in FY15 and 6.5 percent in FY16, added broking firm. On currency front, the rupee is expected to appreciate to 57 to the dollar. “We prefer high quality cyclicals like Maruti , ICICI bank and reform exposure stocks like ONGC and SBI. In midcaps, we prefer Eicher, Motherson, Yes bank and Aurobindo ,” said BoA-ML in its note.

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