Even as the exit polls 2024 predicted a thumping majority for the ruling NDA ensuring the return of Prime Minister Narendra Modi, the stock market is expected to see a jump on Monday. The share market in India recently witnessed volatility amid political uncertainty in elections with the fear index VIX rising to as high as 24. Jigar S Patel, senior manager and technical research analyst at Anand Rathi Shares and Stock Brokers, suggests investment strategies and stocks to watch amid Lok Sabha election results:
“Over the past year, the India VIX has surged by nearly 160 per cent after reaching an approximate historical low of 9.85. It is now holding above the crucial resistance level of 24. Given the market’s history of experiencing significant volatility during election periods, it is expected that the India VIX could rise further to levels between 30 and 34. Thus, when trading before the Lok Sabha election results, it is crucial to adopt a cautious approach,” Patel said.
Patel Suggests Investment Strategies:
Limit High-Risk Positions: Reduce exposure to high-volatility stocks and sectors that might be directly impacted by the election outcomes.
Increase Liquidity: Maintain a higher cash position to take advantage of post-election opportunities.
Diversify Portfolio: Spread investments across various sectors to mitigate risks associated with specific industries.
Use Hedging Strategies: Utilise options or futures contracts, such as buying put options on key indices, to protect against potential market downturns.
Defensive Sectors to Focus On
Consumer Staples and Utilities: Typically remain stable during politically uncertain times due to their essential services.
Pharmaceuticals: Less susceptible to political changes due to the constant demand for healthcare.
Minimise major changes to your portfolio until the election results are clear and the market reaction is better understood to reduce the risk of unpredictable market movements, Patel advised.
Top Stocks to Consider
Anand Rathi’s Jigar A Patel has suggested the following blue-chip stocks across various sectors to consider:
Reliance Industries: A diversified conglomerate with interests in petrochemicals, refining, oil, telecommunications, and retail (Expected support: 2700; resistance: 3000).
HDFC Bank: One of India’s leading private sector banks with a strong growth track record (Expected support: 1400; resistance: 1600).
Sun Pharmaceuticals: Known for its strong global presence and robust product pipeline (Expected support: 1380; resistance: 1560).
Dr. Reddy’s Laboratories: Offers a strong global presence and a robust pipeline of new products (Expected support: 5500; resistance: 6200).
Hindustan Unilever: A major player in the FMCG sector with a strong brand portfolio (Expected support: 2250; resistance: 2500).
Nestle India: Renowned for its strong brand portfolio in the food and beverages sector (Expected support: 2300; resistance: 2500).
Infosys: A leading IT services company with a strong global presence and a solid balance sheet (Expected support: 1350; resistance: 1500).
Tata Consultancy Services: Known for its consistent performance and innovation (Expected support: 3600; resistance: 3900).
NTPC Limited: A major power generation company with a focus on sustainability and renewable energy (Expected support: 340; resistance: 380).
Power Grid Corporation of India: The largest transmission utility in India providing stable returns (Expected support: 295; resistance: 320).
Larsen & Toubro: A leading engineering and construction company with a diverse portfolio (Expected support: 3475; resistance: 3800).
UltraTech Cement: The largest manufacturer of grey cement, ready-mix concrete, and white cement in India (Expected support: 9500; resistance: 10400).
“Ensure your strategy aligns with your risk tolerance and investment goals, and maintain a long-term perspective, focusing on growth rather than short-term market fluctuations. By implementing these strategies and focusing on these stocks, you can better position your portfolio for potential gains amidst the uncertainties surrounding the Lok Sabha election results,” Patel said.
