The report termed surging stocks as 'Modi Stocks'.
- Non-PSU Modi Stocks: Among the 27 non-PSU Modi stocks, all except five cement companies have outperformed the Nifty.
The Surge of Modi StocksSource: CLSA"We identify 54 of these 183 stocks as Modi stocks or about 30 per cent of the F&O universe.
Modi stocks are expected to continue their rally, reflecting investor confidence in economic policies," said the report.
Stocks To Stay In Focus Within the Modi stocks, CLSA India analysts have highlighted preferred BUYs.
'Modi Stocks' Surge 50 pc, Outperforming Nifty And Other Stocks In Last 6 Months (image source: Times Now Digital)
Modi Stocks : In the lead-up to the national election results, the Indian equity market benchmark indices NSE Nifty and BSE Sensex have been experiencing volatility, swinging between unprecedented highs and lows. However, some stocks have outperformed the headline indices. The global equity research firm CLSA in its research found 57 stocks that outperformed Nifty and other stocks with a nearly 50 per cent surge in last 6 months i.e. from early December 2023. The report termed surging stocks as 'Modi Stocks'. As per the report, these stocks would continue to outperform if PM Modi-led NDA returns to power.
What Are 'Modi Stocks?' Modi stocks are those perceived to be the most direct beneficiaries of anticipated policy measures if the PM Modi-led ruling party secures a third term with a strong electoral majority. These stocks typically belong to capex and infrastructure-linked sectors, public sector undertakings (PSUs), or specific corporate houses that are expected to benefit from government policies and initiatives. The rally in these stocks is largely driven by perceptions and expectations of favourable policy outcomes.
Source: CLSA
-PSU Modi Stocks: All 27 PSU stocks from the F&O space have outperformed the Nifty over the past six months, demonstrating a strong market expectation of beneficial government policies.
- Non-PSU Modi Stocks: Among the 27 non-PSU Modi stocks, all except five cement companies have outperformed the Nifty.
The Surge of Modi Stocks
Source: CLSA
"We identify 54 of these 183 stocks as Modi stocks or about 30 per cent of the F&O universe. Interestingly, only five of these 54 stocks have underperformed over the past six months which means 90 per cent of the Modi stocks have outperformed Nifty over the past six months delivering 50 per cent returns," CLSA said In the report.
Performance Metrics
Source: CLSA
"Against the Nifty’s 14 per cent rise, Modi stocks have seen an average up-move of 50 per cent over the past six months. Modi stocks are expected to continue their rally, reflecting investor confidence in economic policies," said the report.
Stocks To Stay In Focus Within the Modi stocks, CLSA India analysts have highlighted preferred BUYs. In the PSU space, they favor ONGC, NTPC, NHPC, SBI, Power Finance, IGL, and Mahanagar Gas. Among non-PSU Modi stocks, Ashok Leyland, Ultratech, L&T, Bharti Airtel, Indus Towers, and Reliance are preferred picks, especially those linked to tariff hikes in the telecom sector.
A positive result would likely boost investor confidence in India’s economic growth, extending beyond direct policy beneficiaries. In the broader market, banks are seen as attractive growth players, with HDFC, ICICI, Axis, and IndusInd already part of CLSA’s India portfolio. Other recommended stocks include Bajaj Finance, Max Financials, Zomato, and DMart.
Historical Performance Of PSU Stocks During Election Season
Source: CLSA
Source: CLSA
Market data indicates that during the 2014 election, the PSU index surged by 82 per cent over 10 months, while in the 2019 election, PSUs experienced an 18 per cent increase over 7 months.
