PhillipCapital said this is a big positive for BJP just before the general election in Apr-May 2023.
This will sustain policy continuity, drive economic growth, and maintain strong earnings, backed by consistent domestic equity investments likely to persist
PhillipCapital expects a positive trend in foreign investor flows into India after the Bharatiya Janata Party’s (BJP’s) victory in three state elections and the global interest rates reaching their peak. The company anticipates an improvement in Foreign Institutional Investor (FII) inflows.
During September and October, FIIs were net sellers due to global geopolitical tensions, increased US treasury bond yields, and the Securities and Exchange Board of India’s (SEBI’s) new Foreign Portfolio Investor (FPI) guidelines, which became effective on November 1. In October, FIIs sold approximately $2.66 billion, while in September, they sold around $2.19 billion.
PhillipCapital said this is a big positive for the BJP just before the general election in April-May 2023. The brokerage firm said it expects improved state development in Madhya Pradesh, Rajasthan, aided by BJP’s strong position in Gujarat and UP. This will sustain policy continuity, drive economic growth, and maintain strong earnings, backed by consistent domestic equity investments likely to persist.
PhillipCapital’s bullish stance on Indian equities began with the clarity on US interest rates peaking post Oct ’23 CPI release. Prior, it anticipated Nifty to remain rangebound. The optimism surged after India’s Q2 GDP at 7.4 percent, prompting an upgrade of FY24 GDP to 7-7.5 percent (most optimistic on the street). Confidence in the continuity of the BJP government post the state elections is expected to boost markets. With strong fundamentals and liquidity, PhillipCapital is now highly positive on equities, projecting Nifty EPS growth at 18 percent for FY24-25.
Also Read: BJP’s election sweep calms populism fears, allays market concerns about political risks
PhillipCapital expresses a preference for various industrial sectors, including capital goods, defense, cement, metals/pipes, automobiles, and EMS. The firm also maintains diversified positions in financials, pharma, discretionary, and staples. Despite challenges such as weak rural demand caused by inflation and growth constraints, PhillipCapital anticipates improved sector performance. This positive outlook is attributed to the BJP’s emphasis on welfare schemes ahead of the union elections, suggesting potential support for economic growth.
Anticipating a balanced strategy between revenue and capital expenditure, the focus remains on maintaining fiscal stability, it said.
Its top picks are L&T, HAL, GET&D, UltraTech Cement, ACC, JSW Steel, Maruti, Tata Motors, Hero MotoCorp, ICICI Bank, Bajaj Finance, Axis Bank, PFC, Shriram Housing Finance, Muthoot Finance, Havells, Kaynes, PG Electroplast, Dr Reddy, Zydus Life, LTIMindtree, Coforge, Trent, Shoppers Stop, SBI Life, ICICI Lombard, Nippon Asset Management, Coromandel, Deepak Fertilizers, Gateway Distriparks, Mahindra Logistics, PNC Infra.
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