Shares of Titagarh Rail Systems tumbled nearly 33%, while Ircon International declined by over 26%. Meanwhile, RailTel Corporation and IRCTC also fell by over 19% in the past two days. RITES, IRFC, RVNL, Texmaco Rail Systems, and Jupiter Wagons saw declines of between 18-23%. In Wednesday’s trade, railway stocks fell by up to 17%.
According to the election commission, the Bharatiya Janata Party (BJP) won 240 seats, falling short of the 272 seats needed for a simple majority in the 543-member lower house of parliament.
“Despite the reduced majority, we expect the policy agenda of Modi 2.0 (investment-led growth, capex, infrastructure creation, manufacturing, etc.) to continue, although with some tweaks,” said the brokerage firm Motilal Oswal.
Regarding further sectoral performance, Motilal Oswal added, “Sectors with over-heated valuations and recent sharp outperformance, such as Industrials, Railways, Defense, and PSUs, may see more moderation in valuations before they become attractive again from a risk-reward perspective.”Other PSU stocks like Cochin Shipyard and Bharat Dynamics also fell by 10% as the BSE PSU index fell by 4%. Stocks like NBCC, HUDCO, Indian Bank, and REC witnessed a decline of more than 5%.Shares of NTPC, CONCOR, Hindustan Copper, GIC, Central Bank of India, NMDC, Powergrid, PFC, BEL, PNB, UCO Bank, Union Bank of India, HAL, BHEL, and SJVN, among others, saw a fall of more than 3%.Despite the fall, analysts remain positive on PSUs as the BJP is set to comeback.
Manish Sonthalia, Chief Investment Officer at Emkay Investment Managers, expects BFSI to do well along with PSUs and industrials. “BFSI has led the earnings growth and seen a correction in valuation. Investment-related themes will come into play with power capex building up in the next 3 to 5 years. We are re-rating public sector units as some of the government entities will have an advantage in sectors such as defence, oil marketing companies, and power financers,” said Sonthalia.
Quant Mutual Fund’s Chief Investment Officer (CIO) feels Modi coming back at the helm could be the endorsement of the policies of the previous government, which means that infra, manufacturing, and PSU as a theme will continue.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)