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Stock market crash: Nifty to fall below 20,000? Stocks to consider after Lok Sabha election results
Stock market crash: Emkay Global said that it expects a stock market derating as PSUs and capital goods are the most vulnerable sectors.
Stock market crash: As the Lok Sabha election results 2024 shocked the stock market owing to BJP-led NDA securing a reduced majority, Emkay Global said that even though the BJP is well short of majority, PM Narendra Modi will be returning to the office but in changed circumstances. In the short term, the broking firm said that it expects a stock market derating as PSUs and capital goods are the most vulnerable sectors. On the other hand, consumption should come back and and value retailers could make strong returns, the brokerage said.
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"The broad direction of the economy is unlikely to change, though factor market reform and privatization are off the table. India is likely to now derate due to higher risk perception. Switch from PSUs and Capital Goods to FMCG and buy Indian equities if the Nifty falls below 20,000 (18 times FY25 PER)," Emkay Global said.
It added, “The bigger surprise is that the BJP, on its own, is set to miss the majority mark by a wide margin, with around 230-240 seats.”
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Emkay said that there is a possibility that the Opposition could form the government if some of the BJP's existing allies cross over.
"The broad pillars of India's economic momentum are unlikely to change. The focus on manufacturing will continue, especially given its importance in job creation. There may be a subtle shift back towards consumption stimulus, but we think it would not be material. State budget deficits may worsen, but we see little risk to the consolidation of the Central fiscal deficit," it said.
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Recommending stocks to buy following the market crash, the brokerage said, “Factor market reforms like those related to land, agriculture, and labor are now off the table, in our view. Privatization and asset monetization are also at risk, which could drag government capex in the short term. Some political reforms like harmonizing elections (which need deep constitutional change) are now also unlikely.”
