Pros weigh which sectors and stocks to invest in after the election | Wilnesh News
Indian stocks have been on a roller-coaster ride over the past week. Markets hit record highs on Monday after news emerged that Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) might pull off a hat-trick, but eventually fell after the party started losing its parliamentary majority. The shockingly huge electoral tally means Modi will now have to rely on smaller parties to form a governing majority in India’s 543-member lower house of parliament. Dhruba Jyoti Sengupta, CEO of Wrise Private Middle, said the phenomenon has raised “concerns about policy continuity, economic reforms and the overall investment environment, leading to increased market volatility, potential capital outflows and a slowdown in foreign direct investment and domestic investment” East in told CNBC Pro on June 5. The Nifty 50 index plunged 5.93% on Tuesday, while the BSE Sensex fell 5.74%, its biggest fall since 2020. Overall, the BSE Sensex index, which includes 30 mature stocks on the Bombay Stock Exchange, has gained about 6.8% in the past six months, while the benchmark Nifty 50 index has gained 8.04%. “Indian equities will need stable policy continuity going forward,” said Kranthi Bathini, equity market strategist at WealthMills Securities. For his part, Sengupta, whose firm serves ultra-high-net-worth and high-net-worth individuals in Asia, the Middle East and Europe, Looking for more long-term investment opportunities in India. “The bull market in India will continue to be driven by favorable demographics, comprehensive economic reforms, infrastructure development, digital transformation, manufacturing growth, strong foreign direct investment, financial market development, consumption growth, sustainability initiatives and strategic geopolitics Supported by factors such as infrastructure. One area that Sengupta has long-term focus on is infrastructure, which will benefit from a combination of government initiatives, policy reforms and private sector participation in the next five years. “The federal budget continues to increase allocations for infrastructure development in the coming years. Each budget this year is expected to continue this trend, earmarking significant funding for roads, rail, airports and other critical infrastructure,” he added. Pure infrastructure companies he oversees include utility company NHPC, power operator NTPC and mining company Hindustan Copper. He has also set his sights on railway companies such as Indian Railway Catering and Tourism Corporation, Indian Railway Construction International Corporation and Titagarh Railway System as India plans to build high-speed rail corridors, modernize existing infrastructure and improve passenger facilities. Strong digital economy and entrepreneurial ecosystem Another long-term theme that Sengupta focuses on is the digital economy and entrepreneurial ecosystem. The wealth manager expects India’s new government to step up digital infrastructure, which he says will in turn increase funding, investment and technological innovation, as well as create a more skilled workforce. “These changes will enable India to become a global center for innovation, entrepreneurship and digital services, promoting sustainable economic development and inclusive growth,” he said. He listed industries such as biotechnology, agricultural technology, financial technology and clean technology. Stocks that Sengupta expects to benefit from this trend include financial services providers such as Canara Bank and Bajaj Finance, which will provide capital to support the entire startup ecosystem. Riding the Consumption Wave In addition to industries expected to grow, WealthMills Securities’ Bathini recommends focusing on companies that will benefit from strong consumption. These include fashion brand Titan, aerospace and defense company Hindustan Aeronautics, and heavyweight conglomerates such as Tata Motors and Adani’s Reliance Industries. These companies “can be acquired over the long term as India’s consumption and capital expenditure cycles will trend upward” as India’s domestic population and, more importantly, its middle-income class increase, he added.