What party manifestos tell us about the next leaders on D-St

MUMBAI: The stock market is currently in midst of a pre-election rally with benchmark indices gaining over 10 per cent since their lows in February. The run-up has promoted market punters to take bets on stocks that could find favour of the new government. Both the national parties the Bharatiya Janata Party (BJP) and the Indian National Congress (INC) have already come out with their election manifestos announcing their focus areas if they are voted to power. ET spoke to market participants on possible scenarios and the themes that could play out after the election results.

IF BJP COMES BACK TO POWER
The BJP manifesto has emphasised extensively on infrastructure sector, especially roads. The incumbent party has promised capital investments to a tune of Rs 100 lakh crore in the infrastructure sector by 2024. They have also said that 50 cities will be covered with a strong metro network in the next five years.

“The infrastructure sector will receive a huge boost if the BJP comes back to power and companies in the sector which are not very highly leveraged could be good bets for the investors,” said G Chokkalingam, founder, Equinomics Research. “However, the new government will have to come up with innovative solutions to accelerate the investment cycle in the sector.”

Various analysts who spoke with ET have said stocks such as Larsen and Toubro (L&T), Sadbhav Engineering and Dilip Buildcon would be the biggest beneficiaries of a push to infrastructure projects.

Market participants also feel corporate banking stocks such as ICICI Bank and Axis Bank will see some upside if the BJP comes back to power.

“The BJP government has focused on bad-loan resolution during its current stint, and we are optimistic that if they are re-elected, more new measures will be taken to address the issue of non-performing assets (NPAs),” said Gaurav Dua, head of research at Sharekhan. Dua also added that the NPA cycle of corporate banks seems to have peaked out implying healthier balance sheets for corporate lenders.

Analysts feel pharma and defence sector stocks could also gain traction under the BJP’s secondterm since both of them have been identified as ‘champion sectors’ to drive economic growth.


IF CONGRESS COMES TO POWER
The manifesto of the Congress party has focused extensively on rural issues. Their plans include introduction of a special budget for farmers, formation of a special commission to look after agricultural development and planning. Mahindra & Mahindra, Crompton Greaves Consumer Electricals and Dabur could benefit from the measures promised by the Congress.

The party’s flagship promise for the current election is NYAY, proposes to provide basic income support of Rs 72,000 for the country’s poorest. They have also promised to revive the National Rural Employment Guarantee Act (NREGA), which could boost domestic consumption. “Such schemes will boost the domestic consumption helping sectors like FMCG,” Dua said.

According to analysts, stocks such as Titan, Bata, Jubilant Food-Works, Marico and Varun Beverages could be the biggest beneficiaries of this consumption push.

Insurance and healthcare are the sectors that could see traction irrespective of whether the BJP wins the election or the Congress. Both the parties have made big promises about improvement of healthcare system in India. While a return of the BJP would ensure continuity in schemes like Ayushman Bharat, the Congress has promised to make healthcare a guaranteed right for every citizen. SBI Life and ICICI Prudential are expected to be the rewarding stocks in the sector, according to analysts.