Motilal Oswal’s chief predicts these stocks will gain if PM Narendra Modi re-elected

Head of brokerage Motilal Oswal Financial Services said that PM Narendra Modi’s return to power for a third consecutive term will boost shares of defence, infrastructure, railway and capital goods companies.

Raamdeo Agrawal said as per news agency Reuters, “These were areas where the government has focussed on, invested money. High probability that the ruling government will continue. If they return… they’ll go (with) much more vigor. In the next 5 years, you’ll see major action from the government, powering these sectors.”

Counting of votes will take place on June 4. In two terms, PM Modi has increasingly focused on infrastructure and boosting domestic manufacturing including in the defence sector. In the last 12 months, shares of top defence, infrastructure and capital goods companies have risen between 64% and 480%, outperforming the Nifty 50’s one-fourth rise.

Raamdeo Agrawa said, “If, for whatever reason, there is no clear mandate to the ruling party, then it’s scary. The correction will be pretty sharp because the expectation built for policy continuity is very high.”

Any changes to the country’s capital gains tax regime in the post-election budget could also hurt the market, he asserted, adding, “The issue of capital gains tax tweaks is definitely there on the table. The government has not denied it. It is a major unknown.”