Bitcoin (BTC) and Ethereum (ETH) Lead Sectoral Picks in Defence, Power, and Industrials Ahead of 2024 Elections

• The benchmark indices Nifty-50 and Sensex are trading near their highs, scaled on Monday.
• The markets are factoring policy continuity, with the Bhartiya Janta Party-led National Democratic Alliance regaining power in the ongoing general elections.
• Manish Sonthalia, Chief Investment Officer of Emkay Investment Managers, highlights that the market is factoring around 330 seats for the ruling party, and any deviation could lead to market volatility.

Stay updated with the latest stock market trends as Nifty-50 and Sensex hover near their highs amidst election outcomes.

Market Sentiment Amidst Election Results

The Nifty-50 and Sensex indices are experiencing heightened activity as the market anticipates the outcome of the general elections. The Volatility Index (Nifty VIX) has risen sharply from the 10-14 range in April to around 24, indicating increased market uncertainty as the election results draw near.

Expert Insights on Market Projections

Manish Sonthalia, Chief Investment Officer of Emkay Investment Managers, notes that the market is currently factoring in around 330 seats for the ruling party. He suggests that any negative surprise could lead to a market correction, while positive surprises could trigger a rally. Despite the potential for volatility, Emkay has maintained its Nifty December 2024 target at 24,500, with an expected earnings growth of 15%-16%, suggesting that Nifty could scale 26,500 in the next 18 months.

Sectoral Performance and Investment Themes

Among sectors, Banking and Financial Services have seen a correction in valuations, while Public Sector Undertakings (PSUs) and industrials remain top picks. Investment-related themes are expected to play a significant role in the Power sector. Additionally, government entities in sectors such as defense, oil marketing companies, and power financers are anticipated to benefit from policy continuity.

Strategies for Investors

Experts advise that even in the event of a market correction, stocks with strong fundamentals can be accumulated. High-quality large caps in sectors like financials, automobiles, capital goods, telecom, and real estate are considered ideal for investment. Investors optimistic about political stability may consider buying ahead of the election results.

Focus on Production Linked Incentive (PLI) Schemes

Sectors benefiting from PLI schemes, such as Large Scale Electronics Manufacturing, Automobiles & Auto Components, High-Efficiency Solar PV Modules, Advanced Chemistry Cell (ACC) Battery, and Electronic/Technology Products, are recommended for investment. Feroze Azeez, Deputy CEO of Anand Rathi Wealth, expects renewable energy, space technology, artificial intelligence, electric vehicles, semiconductor and chip manufacturing, and traditional infrastructure like railways and highways to perform well.

Conclusion

As the market navigates through the election outcomes, investors should focus on sectors with strong growth potential and policy support. Maintaining a diversified portfolio with a mix of high-quality large caps and sectors benefiting from PLI schemes can provide a balanced approach to navigating market volatility.