Yogesh Mehta, Founder of Yield Maximiser, predicts that the domestic equity market will likely remain within its current range until the election results are announced. In a conversation with Business Today, he mentioned that the NSE Nifty index is expected to fluctuate between 21,700 and 22,800 until the results on June 4. This aligns with the recent 1.86% recovery of the 50-share index for the week ending May 17, following a 1.87% decline the previous week. Currently, the NSE Nifty index stands at 22,466.
Mehta believes that sectors such as railways, infrastructure, defense, power, and public sector undertakings (PSUs) could provide strong returns if Prime Minister Narendra Modi is re-elected. Stocks in these sectors have already shown impressive performance on Dalal Street. For example, defense companies like Astra Microwave Products and Hindustan Aeronautics have seen gains of 124% and 194%, respectively, since May 17, 2023. NIBE Ltd, Bharat Dynamics, Data Patterns, and Paras Defence and Space Technologies have also posted gains of 298%, 92%, 81%, and 35%, respectively, during the same period.
Additionally, 50 PSU companies have surged over 100% in the past year. Cochin Shipyard led the way with a 387% increase over the past 12 months until May 16. IFCI, Indian Railway Finance Corporation (IRFC), Housing & Urban Development Corporation (Hudco), and REC have all seen gains exceeding 300% in the same timeframe.
Mehta expresses a bullish outlook on the PSU sector, advising investors to consider stocks in the defense, power, and banking sectors. However, he cautions that an unexpected election outcome could trigger a significant downturn in the market. While the intensity and specifics of such a reaction are unpredictable, he notes that midcaps and small caps have strong potential for long-term outperformance, regardless of the election results. Mehta recommends that new investors invest through systematic investment plans (SIPs) and mutual funds with a long-term perspective. For those with a solid understanding of companies, direct equity investment is advisable.
Regarding the choice between gold and equities, Mehta favors equities for long-term growth potential over the next decade. He describes gold as an unpredictable asset class. Data shows that gold has gained 128% over the past five years and 20% over the last year, while the widely followed BSE Sensex has risen 97% in five years and 19% in the past year.
