These sectors may deliver solid returns if PM Modi comes to power again. Take a look

Yogesh Mehta, Founder of Yield Maximiser, believes that the domestic equity market is likely to stay in the current range until the election outcome. 

In an interaction with Business Today, he said that the NSE Nifty index may hover between 21,700 and 22,800 until the election results are announced on June 4. His views coincide with the 1.86% recovery of the 50-share index for the week ended May 17, after a 1.87% decline in the preceding week. 

At present, the NSE Nifty index is hovering at 22,466 levels. 

The market watcher believes that sectors such as railways, infrastructure, defence, power and public sector undertakings (PSUs) may deliver robust return to investors if Prime Minister Narendra Modi comes to power again.

Shares from these sectors have already been buzzing on Dalal Street due to their superlative returns. For instance, defence players such as Astra Microwave Products and Hindustan Aeronautics have gained 124% and 194%, respectively, since May 17, 2023. NIBE Ltd, Bharat Dynamics, Data Patterns and Paras Defence and Space Technologies also advanced 298%, 92%, 81% and 35%, respectively, during the same period.

On the other hand, as many as 50 PSU companies have rallied more than 100% in the last 1 year. 

With a rally of 387%, Cochin Shipyard has gained the most in the past 12 months till May 16. IFCI, Indian Railway Finance Corporation (IRFC), Housing & Urban Development Corporation (Hudco) and REC have also gained more than 300% during the same period.

“We are bullish on the PSU sector. Investors can choose stocks from the defence, power and banking sectors,” said Mehta.

Mehta further said that any adverse or unexpected outcome from the general election could bring a sharp downfall to D-Street. “No one can predict intensity or quantify market reaction,” he said adding if one keeps aside election results then there is a wide scope of outperformance by midcaps and smallcaps in the long term.

He further advised new investors to invest via systematic investment plans (SIPs) and mutual funds with a clear long-term horizon. “If you understand companies then certainly one can invest in direct equities,” Mehta said.

Should one invest in gold or equities? Mehta said equities have larger potential to grow over the next 10 years. “Gold is an unpredictable asset class,” he said. Data showed that the yellow metal has gained 128% in the last five years and 20% in the last one year. On the other hand, the widely tracked equity index BSE Sensex advanced 97% in the last five years and 19% in the past one year.