Stage set for Modi 3.0? Which stock sectors are likely to see growth?

"Today, when actual results are lower than the market expectation, as well as the exit poll, there is a correction happening. Investors rightfully will be looking at what kind of government gets formed, what kind of analysis is done by political parties of this verdict, and what kind of policy recalibration happens," Nilesh Shah, MD, , told ETNow on Tuesday, commenting on the outcome.

"Now, please remember that every political party has to keep in mind what is the wishes of the voter. Many a times, good politics and good economics do not go together," Shah said.

Nilesh Shah, MD & CEO at , said that he does not know how things will shape up three or six months from now. In his view, the budget in July will "essentially" be the starting point or the launch pad for economic reforms and policy changes.

"The government has already said that the first 100 days are going to be critical. So, my view is that a lot that we will see in the next one year or two years will essentially depend on what gets announced in the next maybe 30 days, 60 days, or the next 100 days, so that essentially will be the icing on the cake," Shah said.

Sandeep Tandon, CIO at calls this a great opportunity to build or reconstruct your portfolio. He remains constructive on India and said that as an institution, Quant has designed or reconstructed a portfolio where it has reduced beta and moved towards safety. "We are very comfortable with that approach rather than saying that we will evaluate a completely different post-election outcome," he added.

Experts pick their top sectors to watch out for:



Gautam Shah of believes metals will deliver "serious alpha" over the next six months calling the pack as his favourite. "I maintain my view that the metals index could appreciate 20-25% from here. So, we are still looking at that entire basket and I think over the next four-five days, the market will go back to normal mode and I think the entire basket of metals should do well," Shah of Goldilocks added.



Shah is also looking to put his money on the pharma sector, arguing that the last three months have been in a band for this pack. "I see a bigger breakout happening there. So, all the top stocks, Cipla, Dr Reddy's, Sun Pharma, Divi’s Labs, I see them delivering supernormal returns," the Goldilocks Premium analyst said.



Manish Sonthalia, Chief Investment Officer, , expects BFSI to do well along with PSUs and industrials. “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 , oil marketing companies and power financers,” said Sonthalia.

Shah of Goldilocks also thinks banks could do the trick for investors in a possible term as they have been extremely volatile for the last four to five months and have only dragged the 50-stock index. "I think going forward, a 50,000 Bank Nifty can easily become a 55,000-57,000 Bank Nifty. If SBI has to move to 1,000 plus, if HDFC Bank has to move to 1,700 plus, if ICICI Bank has to gain about Rs 100-150 from here, I think the rally from here might be led by the Bank Nifty. So, these three pockets which I just spoke about is where my high conviction is," he reasoned.

Infra/Manufacturing/PSU

Quant Mutual Fund Chief Investment Officer (CIO) Sandeep Tandon feels Modi coming back to power could be the endorsements of the policies of the previous government, which means that , and PSU as a theme will continue.

He sees more clarity after the budget is announced to arrive at what the policies would look like in 100 days, 3 years or 30 years.

Defence/Railway/Energy/Manufacturing

Tandon remains upbeat about railways and . While the former is under-owned, sectors like defence and capital goods are witnessing over-ownership though infra space still remains under-owned, he said.

Echoing a similar sentiment, Nilesh Shah, MD & CEO, Envision, highlights energy as one of his top priority sectors. He also gives a thumbs up to manufacturing and infrastructure. "I still believe that the EMI space, which is energy, manufacturing, and infrastructure will remain the bedrock of the pillar of this bull market, that will continue to be the big area," he added. Moreover, financials and premium consumer themes look attractive to him.

Harsh Gupta Madhusudan, Public Interest Director, NSE International Exchange, pins his hopes on infrastructure, defence, renewable energy and real estate.

Also Read:

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)