In the upcoming 2024 Lok Sabha election few smart investors are likely to bet on the stock in favour of the winning party. We already saw the trailer of the election results last week with BJP winning the elections in three states. So here we deep dive to make a Modi government-friendly stock portfolio:
The government has implemented a strategy of merging smaller public sector banks (PSBs) to improve the overall health of the sector. This is being done to address issues such as high non-performing assets (NPAs) and low capital adequacy ratios (CARs).
For example, the recent merger of Indian Bank and Allahabad Bank created the 7th largest bank in India. This merger resulted in a decrease in NPAs from 3.5% (Indian Bank) and 6% (Allahabad Bank) to 4.6%, and an increase in CAR from 14.5% (Indian Bank) and 10.9% (Allahabad Bank) to 13%.
This initiative, implemented by the Modi government, aims to strengthen the PSB sector and promote financial inclusion, particularly in rural areas. By reducing NPAs and improving CARs, the government aims to boost the performance of weaker banks and increase lending to borrowers.
Indian Railways Receives Major Boost: Track laying speed reaches an unprecedented 14.4 km per day, marking the highest-ever commissioning. Budget allocation for railways surges by 16% to Rs 2.9 trillion, with a 22% increase specifically dedicated to building new lines. This budget allocation is a remarkable nine times greater than the amount allotted in the 2013-2014 fiscal year. 400 new-generation Vande Bharat trains are set to be built and produced over the next three years, as announced by Finance Minister Nirmala Sitharaman in the Budget 2022-23.
India’s defence exports have witnessed a remarkable increase in recent years, rising by over 23 times from Rs 686 crore in 2013-2014 to an all-time high of around Rs 16,000 crore in 2022-23. This significant growth underscores the success of the “Make in India” initiative in the defence sector, which aims to boost domestic production and reduce reliance on foreign imports. India has set itself an ambitious defence export target of Rs 35,000 crore by 2024-25. The expenditure on defence procurement from foreign sources has reduced from 46 per cent of the overall expenditure in 2018-19 to 36.7 per cent as of December 2022.
As urbanization continues to accelerate in India, several sectors are poised for significant growth due to rising consumer spending. These sectors include:
Footwear: Metro Brands, Campus Activewear, and other footwear retailers are likely to see increased demand as people in urban areas have more disposable income and a greater desire for branded and stylish footwear.
Apparel: Trent (Westside), Titan (Fastrack), and other apparel retailers will benefit from the growing trend of fashion consciousness, particularly among young adults.
Jewellery Retail: Kalyan Jewellers and others in the industry are expected to experience increased sales as urbanization leads to more weddings and other celebrations, driving demand for gold and other precious metals.
Quick Service Restaurants (QSR): Jubilant Food-works (Domino’s Pizza), Westlife Food (McDonald’s), Devyani International (KFC), and other QSR chains are well-positioned to cater to the growing demand for convenient and affordable food options in urban areas.
Hospitality: Indian Hotels and other hospitality companies are likely to see increased demand for hotel stays and dining experiences as more people travel for business and leisure.
While in 2016, there were only 442 startups in the country, now the number has increased to 99,371 (by May 14, 2023), according to ministry data. More than 100 unicorns are also operating in India. This has also resulted in the creation of 8.93 lakh jobs in the country since the start of the program.
The cost of logistics India’s GDP is 13% of GDP, compared to 8% in developed economies, making Indian exports difficult to compete globally. A logistics policy is now set to revolutionise India’s trade by making goods move faster across India and lowering logistics costs to be comparable to global benchmarks by 2030, thanks to a massive drive to build roads, trains, railways, ports, and bridges.
The Government of India has been promoting the Ethanol Blended Petrol (EBP) Programme in order to improve India’s energy security, reduce import dependency on fuel, save foreign exchange, address environmental issues, and boost the domestic agriculture sector. The Government’s notified ‘National Policy on Biofuels’ in 2018 envisaged an indicative target of 20% ethanol blending in petrol by 2030. However, given the encouraging performance and various interventions implemented by the government since 2014, the target of 20% ethanol blending has been pushed back from 2030 to 2025-26.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.
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