People react to the stock surge in Mumbai on Friday. (AP)
Mumbai, May 16: With Narendra Modi set to head the next government at the Centre, the focus has shifted to sectors that may benefit during his tenure.
Observers feel the focus may be on infrastructure, capital goods, banks, PSUs and oil & gas over the next few months.
Infrastructure stocks have already been on the buy list of investors over the past many trading sessions. Analysts said there might be more steam left in these stocks with the government taking concerted efforts to boost the sector in the coming months.
“We expect steps to increase public investment and encourage private investments in infrastructure. However, we also feel that the government will take measured steps rather than short-term ones as is being hoped by the market,” said Dipen Shah, head of private client group research at Kotak Securities.
Railways, ports and roads could witness specific policy initiatives by the new government as also capital goods and power.
Anup Bagchi, MD & CEO of ICICI Securities, said the BJP had earlier highlighted plans for modernising freight corridors, national highways, ports, airports and connectivity to hinterlands for a structured and inclusive growth.
“Defensive sectors such as pharma, IT and FMCG may take a backseat, while the balance will shift towards sectors linked to domestic investment and infrastructure,” Bagchi added.
Sources said one of the early decisions of the new government could be on a hike in gas prices.
Shares of Reliance Industries today gained 2.59 per cent on hopes that the Centre would go ahead with the raising of gas prices to $8.40 per unit.
According to Paras Bothra, vice-president (equity research) of Ashika Stock Broking, the NDA government may also look at PSU divestment as in the previous occasion.
“PSU banks could receive special attention from the government in the form of capital infusion and other reform measures,” Bothra said.
While domestic equity markets have rallied since the beginning of this year, defensives such as IT, pharma and FMCG have seen robust gains. With the new government seen to focus on some of the other sectors, market circles feel these segments can now emerge as investor favourites.