If Modi 3.0 happens, Nifty will cross the level of 23000 after June 4: Report of leading brokerage

General Election 2024 :Before the Lok Sabha elections, there was a good rally in the market. During the Lok Sabha elections, the market has remained near its peak amidst the ups and downs. On June 1, 7 phases of voting will end, while on June 4, the election results will decide whether there will be Modi 3.0 or the government will change. However, the market and brokerage are seeing more possibilities of Modi 3.0. According to a report by brokerage house Bernstein, BJP will get majority (BJP Govt.The chances are high and the return of Modi government (Narendra Modi 3.0)If this happens, then Nifty will cross the level of 23000 in the short term. However, due to high valuation, some profit booking may also be seen from this level.

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4 Brokerage Scenarios

Case 1

Mission: India 2047
BJP alone will win more than 290 seats
NDA has more than 340 seats

Case 2

capex reduction
BJP has 260-290 seats
NDA has 290-340 seats

Case 3

The Ground Shock
BJP has 240-260 seats
NDA has 270-290 seats

Case 4

return of populism
BJP has less than 240
NDA has less than 270

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If BJP gets majority then Nifty will cross 23000

Brokerage house Bernstein says that on June 4, depending on the election results, many investors will either take fresh positions or close existing positions. The brokerage says that in a situation of continuity/non-continuity, it becomes important to look at the track record of the two major national parties on different fronts to better prepare for investment ideas. We are currently in a unique position to get better valuations. Given that in the last 20 years, India has had governments formed primarily by the Congress (2004-14) and the BJP (2014-24), each of which has run the government for 10 years.

Brokerage says that right now we have more chances of NDA (NDA Govt.The election is expected to be around 330-350 seats. This is a scenario between case 1 and case 2, which will drive some rally in the markets after the election results. In this case, we have a target of 23000 for Nifty in the short term (Nifty)are looking. But in this case when the market (Stock Market)If it goes up, then sharp profit booking is also possible, which will bring the market down a bit from the high level. If Modi 3.0 happens, the government’s 100-day agenda and expectations from the budget are other events that can act as support catalysts. Therefore, we expect some bounce in the equity markets in the near term.

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These sectors will outperform in the market rally

The brokerage says that infrastructure, manufacturing, domestic cycle and some financial stocks can play a big role in this rally. At the same time, pressure may be seen on consumer and IT stocks. According to the brokerage, the performance of small and midcaps may be better than that of large caps for the next few days. The brokerage said that playing with the same theme again and again does not show any change in the results. So we focus on macros, earnings growth, rationalization of valuations.

If case 3 or 4

However, if a scenario of Case 3 or 4 occurs, then some risk will emerge. However, we view this as a less likely outcome. Recently, there was a sentiment in the shares about Modi’s return to power, due to which we saw a strong rally in November/December last year. But playing the same theme again and again leads to absurd results for valuation. So, we believe that eventually the focus will come back to macro, earnings growth, valuations.

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Why does India need Modi 3.0?

As an early-age emerging market, a lot is tied to government policies. To benefit from structural drivers, we believe India has strong traction with many Asian peers. The same government at the Centre will be very beneficial as India moves from the reform cycle to the execution cycle. Building infrastructure, increasing manufacturing, creating more viable export franchises, managing employment and inflation is the list goes on. As India moves from the reform cycle to the execution cycle, power continuity remains a key driver for macrocycle stability.