Markets may see upside if poll results are as expected

Foreign brokerage CLSA says the market will continue to see an upside if election results are in line with expectations.

Most opinion polls have indicated that the Bharatiya Janata Party-led National Democratic Alliance will retain power in the ongoing election.

'Equity markets already factor in this possibility partially, as reflected in improved foreign and domestic flows,' said the brokerage.

Benchmark indices have rebounded 11% from 2019 lows to scale new lifetime highs on the back of $9 billion of foreign inflows.

'Active portfolio allocation changes in favour of India haven't happened in any meaningful way as yet and more market upside is likely if the final election result is in line with opinion polls,' CLSA says in a note.

CLSA says any correction in the market due to poll-related uncertainty could be a buying opportunity.

'Broader economic growth and corporate earnings outlook would not likely change much with the election outcome and hence any potential large market correction due to political reasons would be a buying opportunity,' it says.

'While different political parties have a broad-level policy consensus, manifesto analysis shows that Congress' poll promises might intensify fiscal pressures and raise inflationary expectations,' CLSA adds.

CLSA says housing is a theme investor can look at irrespective of who comes to power.

ICICI Bank, Axis Bank, IndusInd Bank, HDFC, Godrej Properties, Ramco, ITC, Reliance Industries, ONGC and NTPC are among the top picks for the brokerage.

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