Losing sleep over election results? 35 stocks to hedge portfolio from Prabhudas

Stating that consumption-led sectors will do better, irrespective of which government comes to power, Amnish Aggarwal gave out a list of 35 stocks like FMCG, auto, healthcare, IT services, banks, capital goods, commodities, consumer durables, and telecom.

As wild swings are becoming more common on in a highly ahead of the outcome of the on June 4, sectors such as , auto, healthcare, IT services, private banks, and capital goods can be a prudent defensive against , according to a report by domestic brokerage firm .

"We believe domestic consumption-led sectors like and Auto will boost demand under the INDIA alliance, as huge doles of freebies, and loan waivers will revive demand from rural India and the bottom end of urban India. In addition to light consumer durables, telecom will also witness a surge in demand. We note that rural demand is already showing initial signs of revival which will be accelerated by freebies and loan waivers," says Amnish Aggarwal of Prabhudas.

Stating that consumption-led sectors will do better, irrespective of which government comes to power, Aggarwal gave out a list of 35 across sectors like FMCG, auto, healthcare, IT services, banks, capital goods, commodities, consumer durables, and telecom.

FMCG:

Rural demand revival will get a boost if supplemented by freebies. Key stocks – , , , , GCPL, Britannia, Varun Beverages

Auto:

2-wheeler, Tractor, and entry-level cars will benefit. Key stocks-Hero MotoCorp, Maruti and M&M.

Healthcare:

Perfect defensive with Sun Pharma, Cipla, Max Health, and Jupiter as key stocks.

IT Services: More of a global play with very limited impact. Key stocks – TCS, LTI Mind tree, HCL tech, Cyient, and Tata Tech.

Private Banks:

Expect de-rating of all PSUs including banks. Focus may shift to top-rung private banks, which are already trading at a significant discount to their last 10-year P/ABV. Key stocks - HDFC Bank, Kotak Mahindra Bank, Axis Bank, ICICI Bank

Capital Goods:

While many segments in EPC, defence, and new energy are at risk, PL believes global technology leaders like Siemens, ABB, Schneider, Honeywell, Elantas Beck, GE T&D, Hitachi Energy, Timken, Schaeffler, etc. are likely to suffer much less impact.

"While it will be a continuation of policies if NDA comes back to power and themes around Infra, Defence, consumer goods, New energy, Tourism, etc., will continue to do well. Consumer, two-wheelers, and tractors can get a boost from green shoots in rural demand and expectations of normal monsoons. INDIA alliance coming to power will de-rate markets and specific sectors like defence, capital goods, tourism, PSU’s (including banks), drones, AMC, wires and cables, plastic pipes, and EMS," Aggarwal said.

The brokerage has turned overweight on consumer space after 2.5 years and increased weight behind HUL, ITC, Britannia, and Titan. "We also add Delhivery in the model as a proxy to consumer demand. We turn overweight on auto and add Hero MotoCorp in the model portfolio even as we increase the weight on Maruti and M&M. We believe Consumer and Auto (PV, 2W, and Tractor) provide a good hedge as it will benefit from green shoots in rural demand if the current government continues. The scenario will further improve if INDIA comes to power and doles out freebies to a large section of the population," said.

(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