“In the immediate near term, markets are going to focus on election results. An expected return of the NDA regime with a base case scenario of 330 seats will result in policy continuity along with major reforms on land, labour, and judiciary will support positive sentiment in the Indian markets. Over the long term, geopolitical developments and elections in the US and the UK will be watched out for with Fed rate cuts in the 3rd or 4th quarter of FY25,” Emkay said.
The brokerage has advised investors having a multi-cap approach with equal proposition in largecaps and midcaps to take advantage of a broad-based growth in Indian equity markets as most of the delta in the medium term is expected to come from the broader markets.
Also read | Election creates Rs 26 lakh crore stock boom. All greed, no fear on D-Street?
“BFSI, PSUs, and industrials are expected to do well. BFSI has led the earnings growth and seen a correction in valuation. Investment-related themes will come into play with power capex building up in the next 3 to 5 years. We are re-rating public sector units as some of the government entities will have an advantage in sectors such as defence, oil marketing companies and power financers,” said Manish Sonthalia, Chief Investment Officer, Emkay Investment Managers.After being in a slump post-COVID, pharmaceuticals are also expected to see a turnaround. “We are witnessing K-shaped recovery in the premier end of consumer discretionary, with the entry-level segment still not doing well,” he said.Emkay has suggested 5 themes to watch out for:1) Consumption: Per capita income moving up to $4,500 by 2029 will translate into higher consumption of discretionary items.
2) Manufacturing: China+1 and Europe +1 likely to benefit speciality chemicals, pharmaceuticals, automobiles and electronic manufacturing services.
3) Green energy: Solar and wind are expected to be the mainstream of energy transition in India. Value chain on the power side is expected to benefit in a big way.
4) Digitization & AI: India will be at the forefront of innovation in technology
5) Financialization of savings: Moving away from investments in fixed income to equity will benefit investment platform providers.
