Introduction

Elections are approaching in India in April 2024. The general election in India is a crucial event that takes place every five years to elect the leader who will govern the country. It is essential to understand that political parties with different ideologies and agendas can significantly impact people, investors, businessmen, financial institutions, and the overall investment environment of the country.

The uncertainty caused by stock market performance can lead to significant anxiety for market participants, analysts, and policymakers, known as political risk. The relationship between political risk and the capital market is highly significant. It should be thoroughly understood by business owners, farmers, professionals, and anyone else interested in the next government formation.

Therefore, staying informed and up-to-date on the investment environment during these recurring election periods is crucial. General Elections 2024 Stock Picks are discussed in the article on the Lok Sabha Election 2024 effect on the stock market.

Top Sectors and their stocks:

(Sectors that will be affected by 2024 elections in India for short-term and mid-term holding periods [6 months to 2 Years])

INFRASTRUCTURE STOCKS

This sector has great potential when it comes to investing in the Government owned companies. During elections, this sector gets investments and projects from the Government of India, local bodies, and other private players.

In the near term, India’s Union budget 2024 is going to be released after the elections, therefore, expectations of the Government allocating budget to this sector are quite high. Below are some highly lucrative stocks to invest in during elections.

RVNL (Rail Vikas Nigam Limited)

RVNL is a government company working under the Ministry of Railways. RVNL owns 72% shareholding in the company. It is engaged in building rail infrastructure like new gauge conversion, setting up new lines, and railway electrification.

The company recorded a sales growth of 12% compound annual growth rate (CAGR) in the last 3 years and is expected to increase rapidly in the next couple of years. The operating profit margin is maintained at 6%.

The growth of net profit CAGR has been above 20% in the last 3 years. The stock is currently trading near 260, above 200 and a 50-day exponential moving average (EMA). The relative strength index (RSI) on the monthly chart signals good momentum in the stock.

Petronet LNG

Petronet LNG Limited was formed by the Government of India to import liquid natural Gas (LNG) and set up terminals in India for regasification. Petronet LNG is set up as a joint venture between four public sector undertaking (PSU) companies named GAIL, ONGC, IOC, and BPCL.

Currently, each one holds a 12.5% stake in Petronet. The last three-year compounding revenue growth stood at 19%. The company is expected to report higher Net profit at the end of FY-24. ROE stands above 20%, and price-earning ratio (P/E) is at 11.6.

The stock is trading above monthly support of 250 and above 275, which may show good momentum as the RSI is hovering around 60 on the weekly chart. 

IRCTC

IRCTC is a government-owned Indian Railway company. IRCTC provides major services in ticketing, catering, and tourism. The government of India holds 62.4% shareholding in the company, and LIC holds 9% shareholding. Nearly 55% of the revenue comes from ticketing and 27% from catering.

Year-on-year (YOY) compounding sales growth in the last 3 years is above 15%, and Net profit growth is nearly 24%. ROE stood at 45% in the last FY. The company is almost debt-free and holds a monopoly in the business.

On technical charts, the stock is giving a pullback opportunity; it holds strong support near 860 and is expected to give good momentum above 950. 

PSU BANKS

The Public Sector Undertaking (PSU) Banks are another segment to invest in and have chances of a higher rate of return (ROI) because of the decentralization and restructuring going on in this sector by the Central Government.

PSU banks are banks where the government has at least 51% of the stake in a particular bank. Below are some of the highly potential stocks to invest in during the elections.

Bank of India

Bank of India was founded in 1906 and was operated as a private bank till 1969. In 1969, the Bank of India became nationalised and owned by the Government of India. Apart from banking activities, the bank also acts as a depository participant for Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL).

The bank also operated in foreign countries. Bank of India outperformed in FY-24, and its revenue grew by more than 30% in the last year. Net Interest Margins stood at nearly 9%. Net Profit jumped nearly 100% in the last 4 quarters. P/E is at 9.4.

Technically, the stock has recently bottomed out after a poor performance in the last decade. The stock price is now trading above 5 years high and also above 50 and 200 EMAs. Above 140/150, the stock may show another momentum. 

Indian Bank

Indian Bank is also a PSU bank that started in 1907. In 2020, Allahabad Bank merged with the Indian Bank, and it became the seventh-largest public sector bank. It has branches mainly in south India.

Indian Bank reported a positive Net Interest Margin this year after 8 Years. Net profit is expected to double at the end of FY-24. The P/E ratio currently stands at 8.8; the Return on Equity (ROE) is above 10%. Net Non-performing assets (NPA) are also at the lowest level of 0.53%.

Technically, the stock is trading above all the major EMAs i.e. 21,50,200 points on the weekly chart. Recently, the stock bounced back from the support of 460; it may trade on record highs if it sustains above 525. 

Union Bank of India

Union Bank became one of the largest PSU banks in India after the merger of Andhra Bank and Corporation Bank in 2020. The bank operates more than 8500 branches. Union Bank also has international branches in Abu Dhabi, Shanghai, and Hong Kong. The company recorded a positive net interest margin after 10 Years.

Its Non Institutional Investors (NIIs) stood at 5% in the last three quarters. Net Profit jumped 83% in the last 4 quarters. NPA decreased significantly in the previous quarter. Net NPA declined to 1.08% in the December quarter 4% percent on a YOY basis. The P/E ratio stood at nearly 8.8, and the ROE was maintained above 11%.

Technically, the stock crossed its 5-year high in February and formed a rounding bottom on the monthly chart. The stock recently bounced back from Super Trend and 50 EMA support, which indicates a short-term momentum that is also above the 155 price level. 

TOURISM AND TRAVEL 

Tourism and travel are also significant sectors that were in the limelight during the interim budget in February 2024. Thus, there is a high chance that this sector will see a boom after the release of the Union Budget 2024, and thereby, here are some competitive stocks to invest in during elections 2024.

Indian Tourism Development Corporation (ITDC)

ITDC is a PSU company run under the control of the Ministry of Tourism. ITDC is developing the country’s tourism infrastructure. The company provides a one-stop solution for industry needs related to travel, tourism, and hospitality.

Ashoka Travels and Tours is a division of ITDC. Revenue has grown at a faster pace in the last year and stood at 36%. Net Profit grew by nearly 50%, ROE also improved and recorded at 19%. The government owns 87% shareholding and it is a debt-free company.

Technically, the stock has shown a strong break out on the monthly chart just after the interim budget. Currently, the stock gives a pullback opportunity and holds strong support near 600, which is a super trend, and 21-period EMA support is on the weekly chart. If it sustains above 650, the stock may again show momentum.

Indian Hotels

Indian Hotels Company Limited (IHCL) is a Tata Group company founded in 1902 involved in the business of hotels, resorts, and in-flight catering services. IHCL runs 90 hotels in more than 70 locations under the brand name Taj.

It also runs popular brands like Vivanta, Ginger, and Seleqtions. IHCL plans to open 90 new hotels in the upcoming years. Revenue jumped 28% in the last year as compared to 9% in the last 3 years. Net Profit jumped 60%, and ROE improved to 13%. Operating profit margins jumped to 31% from 13% in the last year.

Tata Sons owns 38% shareholding. Technically, the stock is trading above all major EMAs and has a supertrend in all time frames. The stock gave more than a 200% return in the last year; any correction in the stock will be a buying opportunity at pullback, ideally around 550-520, or if it sustains above 600 looks good. 

Wonderla Holidays

Wonderla is the largest chain of amusement parks in India. Wonderla Holidays operates the three largest parks in Kochi, Bengaluru, and Hyderabad. The company is planning to set up an amusement park in Chennai and Bhubaneshwar. Revenue has grown with a compound annual growth rate (CAGR) of 17% in the last 3 years and 25% in the last year.

Net profit grew 39%, and ROE improved from 3% to 16%. The company is almost debt-free, and P/E stood at 33. Technically, the stock is consolidating near all-time high levels. It has given nearly 300% return in the last 2 years. Recently, the stock has given a pullback opportunity near 21 period EMA on the weekly chart.

Weekly and Monthly support lies in the range of 800-850. Another pullback opportunity we can see is near 940, or if it is sustained above 1020, it may show good momentum. 

FINANCIAL SERVICES

The Financial Services sector is another important domain where the union budget invests each year, especially when it comes to Government-owned enterprises.

This year also there are high expectations in the Union Budget for the allocation of funds to this sector. India’s largest state-run enterprise by market capitalization is LIC of India, and it seems to be a decent stock to invest in during elections.

LIC of India

Life Insurance Corporation of India is a government-owned insurance company that manages approximately Rs 50 trillion worth of AUM. LIC has more than 60% market share in terms of total premium. The government holds 96.5% shareholding in the company. LIC has investments in approximately 90 listed companies.

The company’s sales rose by 8% CAGR in the last 3 years, and net profit rose by a whopping 138% CAGR. Return on Equity is above 100%, and P/E ratio is at 14. Technically, the stock is trading above 200 EMA and strongly holds monthly support near 850-900. Stakes in infrastructure companies.

Summary of the top 10 stocks to invest during Elections 2024

(Stock Picks for 2024 Lok Sabha Elections, Stocks to Buy before Lok Sabha Election 2024)

Serial No.	Name of the stock	Current Market Price (CMP) as of April 11, 2024 [(IPL Stock Price) (In Rs)]	P/E	Market Capitalisation (in Rs Crore)	Sector
1)	RVNL (Rail Vikas Nigam Limited)	260.50	37	54200	Infrastructure
2)	Petronet LNG	302.95	13	45400	Oil and Gas
3)	IRCTC	1,023.00	72	81800	Railways
4)	Bank of India	143.75	10	65700	PSU Bank
5)	Indian Bank	528.00	9	71200	PSU Bank
6)	Union Bank of India	151.20	8	115000	PSU Bank
7)	IndianTourism Development Corporation	669.50	26	5700	Infrastructue,Tourism
8)	Indian Hotels	597.00	73	85000	Hotels, Tourism
9)	Wonderla Holidays	1,047.00	35	5900	Entertainment
10)	LIC of India	977.00	15	618000	Insurance

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Note: The Equitypandit Analyst Team has verified all the data and information the blog provides.

Disclaimer: Investing in the Equity market in India is subject to risks, i.e. the market keeps on fluctuating. This article is purely for educational purposes. The views expressed and data provided here are by Equitypandit’s team. Kindly do not completely depend on the information provided as the risk appetite differs from individual to individual and there are various other factors in the market to determine the factors to invest in.