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Stocks to Watch if BJP Wins 2024 Lok Sabha Elections

The 2024 Lok Sabha elections are just around the corner, and India's political landscape is heating up. The Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, is seeking a third consecutive term in power, while the opposition parties are trying to form a united front to challenge the BJP's dominance.

The outcome of the elections will significantly impact the Indian economy, stock, and bond markets. The government's policies and initiatives will shape the future of various sectors and industries. An investor must know the sectors and stocks that may benefit from a BJP win.

Sectors/Stocks to benefit from BJP win 

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1. Indian railways 

According to experts, Indian railways' capital expenditures can climb significantly. The government may prioritise modernising current trains with amenities while introducing several new trains on popular routes. An announcement for infrastructure expansion for the train network is also expected in the Union Budget, which is scheduled for after the elections.

The BJP government's affection for railroads was demonstrated in the last budget when it allotted Rs 2.40 lakh crores for capital expenditure in the growth of Indian railways. This figure is nine times more than what the UPA government announced during the fiscal year 2013-14. 

The key stocks to watch out for this election are:

The remarkable thing is that in the run-up to the interim budget, several equities have already begun to climb and have reached their 52-week or all-time highs.

 2. Defence sector 

Under the BJP government, the "make in India" idea has expanded beyond consumer durables and textiles to the defence sector

The ruling government has released four 'Positive Indigenisation Lists' to reduce import dependency and stimulate domestic production. This list contains 411 items related to services, with three sub-lists under Defence Public Sector Undertakings (DPSUs). That means about 3,783 items on the list are now manufactured locally. 

You can look at the previous year's budget to understand what defence means for the BJP government. The Ministry of Defence (MoD) has been allotted Rs 5.94 lakh crore. This figure accounts for 13.18% of the total Rs 45.03 lakh crore budget.

Some stocks to observe post-election are:

 3. PSU banks

The government has always been concerned about the rise of non-performing assets (NPAs) and bad loans in PSU banks. Since the BJP came to power, the country has seen the merging of numerous well-known banks that you would never imagine.

The government did this to boost capital adequacy ratios (CARs) and the general health of the banking sector.

Here's an example of how merger policy has benefited this sector. When the government merged Allahabad Bank and Indian Bank, the combined NPA fell to 4.6%. 

The CAR also increased to 13%.

 4. Oil and gas

The oil and gas sector supports the country's energy security, foreign exchange earnings, and fiscal revenues. Even since 2014, the BJP government has supported the sector through various reforms, policies, and initiatives.

Here are some stocks from this industry you must keep track of.

 5. Startup culture

Since the BJP took power in 2014, Indian startup culture has been making headlines. According to a report, there were only 442 startups in India in 2016. The figure rose unexpectedly to 99,371 by May 2023. 

Currently, over 100 firms have become unicorns and are set to exploit the stock market. If the BJP wins again, this segment is certain to thrive.

 6. Ethanol sector

Ethanol, when mixed with petrol, emits fewer greenhouse gases. The government has launched the Ethanol Blended Petrol (EBP) Programme to promote ethanol production. This scheme helps improve energy security, decrease fuel imports, save foreign exchange, preserve the environment, and support the agriculture sector. 

In 2018, the government declared a ‘National Policy on Biofuels’, which aimed to achieve 20% ethanol blending by 2030. However, because of the government’s effective actions since 2014, the target has been brought forward to 2025-26.

 Conclusion

As the 2024 Lok Sabha elections draw nearer, the anticipation and speculation surrounding India's political future are palpable. With the Bharatiya Janata Party (BJP) vying for a third consecutive term under Prime Minister Narendra Modi's leadership and opposition parties aiming to challenge its dominance, the outcome of the elections will undoubtedly leave a significant imprint on the nation's economy and financial markets.

The stock market, in particular, is closely watching the electoral dynamics, as the government's policies and initiatives often dictate the trajectory of various sectors and industries. Investors are keenly eyeing sectors and stocks that may benefit from a BJP victory, aligning their strategies accordingly.

Sectors like Indian Railways stand to gain substantially, expecting increased capital expenditures and modernisation efforts under a BJP-led government. Stocks such as IRCTC and IRFC are already showing promise, reaching significant highs in anticipation of favourable outcomes.

Similarly, the defence sector has seen a surge of interest under the BJP's tenure, with initiatives like "Make in India" driving domestic production and reducing import dependency. Stocks like Mazagon Dock Shipbuilders Ltd. and Bharat Dynamics Ltd. are poised to capitalise on further advancements in this arena.

Meanwhile, the government's focus on addressing non-performing assets (NPAs) and strengthening public sector banks (PSUs) through mergers has piqued investor interest in this sector. Oil and gas, startup culture, and the ethanol sector are also expected to witness significant activity, with stocks like Oil & Natural Gas Corporation and Reliance Industries drawing attention.

However, prudent investors must conduct thorough research and analysis before entering the post-election market frenzy. While optimism prevails, a cautious approach, informed by past performance and current financial standings of stocks, is essential for navigating the volatile landscape of the stock market post-election.

 

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