0

0

0

0

0

0

0

0

0

This article is more than 2 year old.

Top brokerage calls for May 20: CLSA, Credit Suisse, Morgan Stanley expect post-election rally after exit polls show Modi's return

Mini

Indian shares are expected to rally on Monday after the exit polls of the 2019 Lok Sabha elections projected the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) to win with a comfortable majority. Analysts said the equity market has already priced in Narendra Modi's win, however, the exit poll numbers will further boost Indian benchmark indices BSE Sensex and NSE's Nifty 50.

Top brokerage calls for May 20: CLSA, Credit Suisse, Morgan Stanley expect post-election rally after exit polls show Modi's return
Indian shares are expected to rally on Monday after the exit polls of the 2019 Lok Sabha elections projected the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) to win with a comfortable majority. Analysts said the equity market has already priced in Narendra Modi's win, however, the exit poll numbers will further boost Indian benchmark indices BSE Sensex and NSE's Nifty 50.
A News18-Ipsos exit poll has predicted NDA winning 336 out of 542 seats, with BJP gaining 276 seats and allies seen taking 66 seats. Congress-led United Progressive Alliance is likely to win 82 seats, with the grand old party taking 46 seats and the rest of 36 to allies.
At 7:05 AM, the SGX Nifty, a key indicator for the Indian market surged 2.16 percent, at 11,681, indicating a gap-up start for the Sensex and the Nifty.
Among brokerages, CLSA said that valuations and economy will likely cap near-term Nifty upmove to 12,000. While, Nomura expects it will be a better-than-expected result for the BJP-led NDA, and that near-term growth risks shall remain. Morgan Stanley believes Indian equities to stage robust rally. Here are top brokerage calls following exit polls outcome:
CLSA on Exit Polls 2019
1. Optimism of a stable government is reflected in Nifty
2. Nifty outperformed MSCI by 4 percent last week
3. If exit poll predictions are right, more outperformance is ahead
4. Risk is of populism or fiscal worries will decline
5. Downside would be reviving economic growth may not remain an urgent priority
6. Market sentiment could improve considerably
7. Valuations & economy reality will likely cap near-term Nifty upmove to 12,000
8. Top picks remain ICICI Bank, Axis Bank, HDFC, Godrej Properties
9. Top picks remain Ramco, Reliance & ITC
10. Midcaps should be back in favour
Nomura on Exit Polls 2019
1. Exit polls predict a clear majority for the BJP-led coalition
2. Near-term growth risks remain
3. If exit polls hold, NDA will have performed better than investor expectations
4. Rural reflation, infra spending, streamlining of goods and services tax (GST) likely to be the key priorities
5. Direct tax reforms & consolidation of public sector banks (PSU) banks are likely to be key priorities
6. Fiscal consolidation will be a challenge in absence of revenue mobilisation
7. Do not foresee a major reversal of weak economic conditions in short-term
8. See growth moderating from 6.6 percent in Q4CY18 to 6.2-6.3 percent in H1CY19
9. Expect a gradual recovery towards Q4CY19
Morgan Stanley on Exit Polls 2019
1. Given what is priced in, stocks will likely rally on the back of exit polls
2. If exit polls are right, Indian equities should stage a robust rally
3. For the broad market, chances are further skewed to an upward move
4. If actual results are a fragmented verdict, equities could take a meaningful hit
Jefferies on Exit Polls 2019
1. Expect a strong post-election rally if current government returns
2. L&T, BEL & Bharat Earth Movers will be key players
3. Believe close to $10 bn of projects should be awarded once new cabinet is formed
4. Road execution per day up from 11 km in 2014 to 30 km in 2019
5. Expect this momentum to continue if the current government returns
6. L&T, NCC, Sadbhav Engineering will be key industry players
7. Renewable energy scaled up, but no major listed beneficiary
8. Ports & shipping the next wave– Adani ports, L&T key beneficiaries
9. DFC execution sees pick-up; railways disappointing progress
10. Concor, Gateway key beneficiaries
11. Top picks are L&T, ABB, Voltas, KEI, NTPC, Concor & Gateway
Credit Suisse on Exit Polls 2019
1. Market consensus is 225-230 seats for BJP
2. Exit polls have BJP itself being closer to majority, implying a more stable government
3. Could see a broad-based upmove in the market
4. Could see an upmove despite fundamentals being weak
Bank of America Merill Lynch on Exit Polls 2019
1.Difficult to recommend portfolio changes between now and May 23
2. Continue to like banks as asset quality cycle seems to have bottomed
3. With little happening locally, IT sector could deliver
4. Post elections, volatility is likely to fall and market moves will depend on emerging markets direction
5. Unlikely for even a stable government to change growth trajectory in near-term
6. Broad-based rally unlikely in absence of growth and slowing domestic inflows
next story