Lok Sabha election results 2024: What to expect from ‘Modi stocks’ now

Stock market: BSE PSU index is up nearly 200% in the last five years and in this election season “Modi stocks” generated ₹7 lakh crore for investors.

Public sector undertakings (PSUs) have been one of the biggest beneficiaries in the past ten years. The stocks witnessed multibagger surge but as Lok Sabha election results restricted the BJP-led NDA to a thinner majority, analysts expected the state-owned companies to sustain their rally. This could happen in the longer run while the stocks have not performed well in the past two sessions.

Stock market: Prime Minister Narendra Modi during an interaction with supporters at the party headquarters in New Delhi. (PTI)

Emkay Global said that it expects a market derating as PSUs are among the most vulnerable sectors which the brokerage said investors should stay away from for the time being. The BSE PSU index was down as much as 15% on Monday as results started trickling in and the sell-off was seen across the board where Rites, RVNL, PNV, Power Finance Corp, Nalco, IRCTC lost over 15%.

In contrast, the BSE PSU index is up nearly 200% in the last five years and in this election season “Modi stocks” generated a massive wealth of ₹7 lakh crore for investors.

Foreign brokerage CLSA said that following the election results investors will be confronted with a reality check that many of the positives these stocks may have started baking-in.

"This may drive profit-taking by the less patient holders of Modi stocks. Something similar happened following the last two elections when PSU stocks topped-out a few weeks after the election results in the month of June. We expect this in June or July, before the budget in July," it said.

CLSA India analysts picked ONGC, NTPC, NHPC, SBI, Power Finance, IGL and Mahanagar Gas among the PSU stocks.