CLSA Identifies Stocks Set to Benefit from BJP Victory, PSUs Lead the Pack

CLSA Identifies 54 Stocks Set to Benefit from BJP Victory, PSUs Lead the Pack

International brokerage CLSA has identified 54 companies poised to benefit directly from the current government’s policies, with public sector undertakings (PSUs) comprising half of this list. These firms span capex and infrastructure-linked sectors, PSUs, and select corporate houses. CLSA has dubbed these companies “Modi stocks” due to their rally driven by the prospects of the BJP returning to power.

Over the past six months, these “Modi stocks” have seen an election-focused rally, with 90 percent outperforming the Nifty. This trend is expected to continue, particularly if the incumbent government secures a strong majority, according to CLSA.

Top picks include L&T, NTPC, NHPC, PFC, ONGC, IGL, and Mahanagar Gas, which are likely to benefit significantly from a favorable policy environment. However, CLSA cautions that the narrow, election-themed rally might end in June-July.

PSU stocks are predicted to continue rising until June or July, ahead of the budget announcement, driven by the election-themed rally that is expected to taper off mid-year. Post-elections, investors might face a “reality check,” as observed in the last two elections where PSUs peaked after results. For the second half of FY25, CLSA sees the best risk-reward play in banks like HDFC Bank, ICICI Bank, Axis Bank, and IndusInd Bank due to their growth potential.

Despite the clear pushback on rate-cut expectations allowing American banks to outperform year-to-date, Indian private banks have lagged. Other stocks highlighted by CLSA’s analysts include Ashok Leyland, UltraTech, and L&T, with positive outlooks also on Bajaj Finance, Max Financials, Zomato, and DMart. In the telecom sector, Bharti Airtel, Indus Towers, and Reliance Industries stand out as top picks.