What Are Modi Stocks?

'These are capex and infrastructure-linked sectors, PSUs or stocks of some corporate houses.'

The stocks of companies such as Mukesh Ambani-owned Reliance Industries, Sunil Mittal-controlled Bharti Airtel, Indus Towers, and shares of select public sector undertakings like ONGC, Indraprastha Gas Limited, NHPC, which analysts at CLSA have termed as 'Modi stocks' in a recent report, have outperformed the Nifty50 in the past six months.

Against the 14 per cent rise in the Nifty, the average up-move for 'Modi stocks', CLSA said, has been 50 per cent over the past six months.

This may be the basket, which continues to rally the most if the market celebrates a strong election result for the ruling party on June 4, or vice versa.

To get a sense of the 'election excitement', CLSA scanned 183 stocks where an active futures & options (F&O) offering helped in making them the more liquid part of the Indian equity market.

The election-linked expectations build-up, CLSA said, started about six months ago with a strong state election result for the Bharatiya Janata Party in December 2023.

What are Modi stocks?

Over the past six months, while the Nifty50 has rallied 14 per cent, about 44 per cent of the stocks in the above list of 183 counters have underperformed Nifty, which indicates the rally has not been broad-based.

'We drill further and separate the stocks, which are perceived to be the most direct beneficiaries from popularly expected policy measures if we see a third term for the Prime Minister Narendra Modi-led ruling party with a strong electoral majority,' wrote Vikash Kumar Jain, Adarsh Agarwal and Hemant Kothari of CLSA in a recent note.

'As these stocks sectors, and are rallying more on perceptions -- for easy recall we call them 'Modi stocks'. These are capex and infrastructure-linked sectors, PSUs or stocks of some corporate houses,' Jain, Agarwal and Kothari noted

Feature Presentation: Ashish Narsale/Rediff.com