1 PSB, 3 Tata group stocks among 21 large and midcap stocks to buy as NDA win seen to fuel short risk-on rally

After the landslide triumph of NDA successful Maharashtra elections, the home brokerage Motilal Oswal Financial Services (MoFSL) stated that arsenic the elections successful the 2 states are present behind, it should bring the undercurrents backmost successful the markets.

For Maharashtra, the past 5 years were characterized by governmental instability, with predominant philharmonic chairs astatine enactment for the CM post. This decisive verdict ends the chronic instability successful 1 of India’s astir industrialized and economically important states, added the brokerage study 'India Politics'.

Moreover, the BJP’s beardown show (won 132 seats; bulk people 145) volition guarantee stableness successful the governance and bring renewed absorption connected infra development, underlined the report.

Market perspective

The brokerage held that amid a big of factors including anemic Q2 earnings, dollar gains, uncertainty successful geo-political scenery arsenic good arsenic continued FII outflow, each the large indices successful the past 2 months from the highs recorded successful Septenber 27 has corrected steeply. Also, the anxiousness astir the Maharashtra elections is besides down america with much clarity.

With elections present down and the BJP getting a beardown boost from Haryana and Maharashtra elections, we expect the authorities to present absorption connected spending (1HFY25 govt. spending is level YoY and is down 17% for Capex spending). This canvass result, coupled with a betterment successful agrarian spending (on the backmost of bully monsoon and expected beardown Kharif output) should amended the request communicative astatine the margin. The wedding play successful 2HFY25 (30% higher weddings YoY) volition besides supply a fillip to demand, added the report.

Earnings betterment is besides seen with  Nifty net expected to turn 7% successful 2H vs. 4% successful 1H arsenic a mini risk-on rally tin beryllium fuelled fixed a boost successful sentiment. 

Given the caller correction, we judge valuations, particularly for largecaps, are rather tenable present astatine 19.3x FY26E EPS. Midcaps and Smallcaps are inactive trading astatine costly valuations, with NSE Midcap 100/NSE Smallcap 100 trading astatine a P/E of ~30x/~23x. The volatile geopolitical backdrop and question successful dollar scale volition beryllium the adjacent word monitorables.

Preferred sectors: BFSI (Private arsenic good arsenic PSU and non-lending NBFC), Capital Goods, Real Estate, Manufacturing, Consumer Discretionary, IT, Healthcare.

Largecap stocks preferred by MOFSL: M&M, SBI, L&T, Indian Hotels, ABB, Dixon, Bharti Airtel, TRENT, HINDALCO, Titan, HCL Tech;

Midcap stocks: ANGEL, BSE, AMBER, IPCA, CUMMINS, PAGE, Godrej Property, COFORGE, JSW Energy, Gravita