Benchmark stock market indices hit a record high on Monday, just a day after the Bharatiya Janata Party (BJP) registered decisive electoral victories in three states. As the domestic markets continued to rally, defense and railway sector stocks witnessed significant gains during Monday’s trading session.
With the BJP securing power, analysts anticipate continued attention and growth in the two sectors. Stocks of Hindustan Aeronautics Ltd, Bharat Electronics Ltd and Bharat Dynamics Ltd, saw gains ranging from 1.5 per cent to 5 per cent. Notably, Hindustan Aeronautics shares touched a 52-week high in early trade.
Investors in these stocks have witnessed substantial returns in 2023, with Hindustan Aeronautics shares yielding nearly 100 per cent return and Bharat Electronics shares increasing by 54 per cent.
Meanwhile, railway stocks, including Rail Vikas Nigam Ltd, Indian Railway Catering & Tourism Corporation Ltd (IRCTC), Ircon International Ltd, and BEML Ltd, observed gains between 2 per cent and 5 per cent during the trading session so far. It may be noted that Rail Vikas Nigam has delivered a remarkable 151 per cent return to investors in 2023, IRCTC saw a 12 per cent increase, and Ircon witnessed an impressive 194 per cent surge.
According to analysts, the BJP’s strong performance in the assembly elections has led to greater optimism among market participants regarding a third term for the ruling party in the 2024 Lok Sabha elections.
This is likely to provide a massive boost to the momentum on Dalal Street, especially sectors such as railways and defense. This is because of the government’s continuous focus on investments in railways and defense sectors.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the stock market’s preference for political stability and a government committed to market-friendly reforms.
He noted that the market has, to a certain extent, already factored in the likelihood of a Bharatiya Janata Party (BJP) victory, as evident from a 500-point rally in the last four sessions.
Despite this, Vijayakumar expressed that the prevailing exuberant sentiment is expected to sustain the ongoing rally.
“The market has already factored in a BJP victory with a 500-point rally during the last 4 sessions. However, the prevailing enthusiasm is so robust that the momentum is anticipated to persist,” he remarked.