A snapshot of market winners and losers from Lok Sabha elections 2019

Winners include cement companies, pipes, tiles and sanitary-ware manufacturers, capital goods and infrastructure companies.

Business Standard : A decisive mandate for India’s ruling coalition and a second term for Prime Minister Narendra Modi has assured investors of stability and policy continuity in Asia’s third-biggest economy.

Still, equity markets ended in the red after surging to an intraday record on Thursday as the result broadly matched investor expectations and was partly priced in after exit polls this week.

Political stability alone isn’t likely to drive continued outperformance by India’s equities or currency, with investors also weighing headwinds from softer domestic consumption, rising oil prices and a trade war. And valuations are already on the higher side: The benchmark S&P BSE Sensex trades at a 12-month blended forward price-to-earnings multiple of 18.3, above its five-year average.

“Markets are pricing in double-digit earnings growth over next few years. From a risk reward point of view, it is delicately balanced,” Nilesh Shah, chief executive at Kotak Asset Management Co., said in an email. “The direction will depend on steps that the government takes to accelerate growth.”

Here’s a snapshot of the winners and losers from India’s elections:

WINNERS

Agricultural Sector

In an interim budget in January, the government made clear that farmers are at the top of its agenda. The party aims to invest 25 trillion rupees ($359 billion) in rural development and offer farmers 6,000 rupees per year in income support. Also, it has planned increased spending on animal husbandry and fisheries.

Rural-focused companies including those providing seeds, pesticides, irrigation products, consumer staples and motorbike manufacturers stand to gain.

Infrastructure and Real Estate

During the campaign, Modi pledged to spend $1.44 trillion on repairing the country’s creaky infrastructure. Meanwhile, the government is already promoting affordable housing and has announced tax breaks to encourage buyers.

Winners include cement companies, pipes, tiles and sanitary-ware manufacturers, capital goods and infrastructure companies.