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Stocks to Watch if BJP Wins 2024 Lok Sabha Elections

16 Feb 2024

Introduction

 

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 

 

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

Many experts are optimistic about the stock market. However, before participating in the market after the election, conduct an extensive study on the stocks' past performance and current finances.

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