As Political Uncertainty Recedes, Brokerage Picks L&T, NCC, Others As Key Beneficiaries

The Indian market continued its strong recovery on Thursday as Narendra Modi‘s path to a third term in the prime minister’s office.

What Happened: Analysts at global brokerage firm CLSA are optimistic about the prospects for Modi 3.0, powered by support from political allies.

The analysts suggest that the coalition government is poised to pursue an ambitious 100-day agenda, with substantial plans for large-scale orders in the infrastructure and defence sectors. The brokerage anticipates that the new government will swiftly initiate action in these areas, aiming to make significant progress early in its term.

See Also: BHEL Shares Rally 10% On Major Order From Adani Power

The brokerage firm also noted that innovative funding mechanisms and the Reserve Bank of India’s dividend contributions should ensure sufficient resources for any social initiatives.

This approach is expected to alleviate concerns that the coalition government might lean towards more populist measures. By securing financial stability, the government can focus on its developmental goals without compromising fiscal discipline, the brokerage added.

While many see the BJP’s reliance on allies as a potential vulnerability, analysts at CLSA view it as an opportunity for increased capital expenditure, especially at the state level.

The coalition partners’ demands for greater capital investments are likely to stimulate capex, potentially driving economic growth across various states. As per the brokerage firm, this dynamic is expected to benefit several companies, particularly those in the construction and capital goods sectors.

Among the key beneficiaries identified by CLSA are firms like Larsen & Toubro, IRB Infra, NCC, and J Kumar Infraprojects. These companies, which operate primarily in the construction and infrastructure space, are well-positioned to capitalize on the anticipated increase in government spending on infrastructure projects.

Price Action: L&T’s share price was up 1.92% to trade at ₹3,474.55, IRB Infra was up 5.27% to trade at ₹70.85, NCC’s share price was up 4.18% to trade at ₹301.85, J Kumar Infra’s share price was up 3.80% to trade at ₹747.75.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.