'Aayega To Modi' becomes new ATM strategy for stock investors before election result
Investors are capitalizing on the "Aayega To Modi" (ATM) strategy, as optimism surges with predictions of Prime Minister Modi's return. Bullish sentiment prevails, backed by favorable fundamentals and technicals, signaling potential gains across various sectors, particularly in infrastructure and manufacturing.
looking to make money are now hitting the ! Not literally though as 'Aayega To ' (ATM) is yielding smart returns for investors while who were sitting on the sidelines are being butchered in Monday's short-covering rally."Most on the Street were pessimistic about PM 's chances or were sitting on the sidelines. Now, very few will have the courage to participate on the upside. People will continue to clamor for a correction, but I believe every dip will be bought into. The month of June could be a defining one for bulls, so one should make the most of this opportunity and stay a bit greedy," said Vikram Kasat, Head - Advisory, .
After last month's buy the dip call, June's slogan is going to be 'Ride the wave', he said.
In one of those rare occasions, fundamentals, technicals and sentiments have turned favourable at the same time in the after took a unanimous call in predicting that Dalal Street favourite Narendra Modi will return as the prime minister for the third consecutive time.
As a result, the Street's fear gauge India VIX also cooled off by about 20% in a broad-based rally spread across sectors and market cap biases.
On Friday, FII long-short ratio stood at a multi-year high of 87% shorts in index futures, coupled with heavy selling in the cash market. On the other hand, retail investors were holding highly leveraged long positions and, therefore, have an upper hand in today's session.
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If the exit poll results hold true, brokerages say India is likely to enter a golden phase of political stability and policy continuity.
"Fundamentally, India is witnessing its own mini-Goldilocks moment with excellent macros, solid corporate earnings, focus on manufacturing, capex and infrastructure creation, and valuations at 20x one-year forward earnings. This verdict and consequent political stability and continuity in policy-making will act like an icing on the cake and keep India as the cynosure of all eyes, in our view," 's Gautam Duggad said.
Throwing up new opportunities for investors, the focus of Modi 3.0 will likely continue on developing the country’s public infrastructure such as roads, water, metro, railways, defence, digital infrastructure, and green technologies.
"The immediate beneficiaries of a third NDA government are Capital Goods (Railways and Defense), Housing, Tourism, and Aviation. Textiles and Pharma API are probable winners. Valuations, though, are a challenge for some of these sectors. We remain overweight on Industrials, Discretionary, and Materials, whereas Financials and IT are the key underweights," said Seshadri Sen of .
However, due to the huge disconnect between price and fundamentals, the broad-based rally in mid and smallcaps are expected to normalize post elections.
"Many narrative and PSU stocks are trading at outlandish multiples and are factoring in optimistic volume and profitability assumptions. A large BJP victory may sustain rich-to-bubble multiples in parts of the market (automobiles, capital goods, PSUs) for longer, but we would be surprised if many of the lofty embedded expectations come to fruition," said Sanjeev Prasad of .
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Source: Stocks-Markets-Economic Times
