Exit Polls: Here's your portfolio strategy as Sensex, Nifty scale new highs

Investment startegy: Benchmark indices Sensex, and Nifty50 hit record highs on Monday, June 3, 2024, after exit polls, over the weekend, indicated a decisive victory for the Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP) government.

The benchmark Sensex hit a new all-time high of 76,738.89, while the Nifty50 surpassed the 23,300-mark to reach 23,338.70.

According to the exit polls, the National Democratic Alliance (NDA) is projected to secure around 370 seats, with News24 - Today's Chanakya, and India Today - Axis MY India Exit Poll leading with estimates of 400 seats. Notably, none of the 12 exit polls analysed predicted a defeat for Narendra Modi, with the lowest forecasted NDA seats at 316. The BJP alone is expected to secure approximately 325 seats, compared to the 303 it won in 2019.

"The victory of PM Modi/BJP augurs well for the economy and capital markets as it provides stability and continuity in policy- making with a single-party majority government, which will be expected to continue pushing its economic agenda. Equity markets displayed some anxiety and nervousness recently around the impending political uncertainty, which resulted in a sharp rise in volatility in April and May 2024. With this clear verdict, markets will heave a sigh of relief and go back to fundamentals," Motilal Oswal Financial Services said in a note.

As markets await the actual Lok Sabha election 2024 result, what should investors do? Should they chase the momentum or book profit?

According to Mehul Kothari, deputy vice president - technical research at Anand Rathi Shares and Stock Brokers, short-term investors, who were bullish on election results, should consider booking 50 per cent of their profits.

"Technically, the Nifty 50 index has reached the upper end of the rising channel pattern. The breakout would be confirmed only above today's high of 23,338. A move above the same might extend the rally towards 23,500 – 24,000 and there the remaining profits can be booked," he said.

Gaurang Shah, senior vice president at Geojit Financial Services, too, says investors should exercise patience and avoid rushing into decisions.

"It's prudent to wait for clarity post-election results before making investment moves. The market will continue to offer opportunities even beyond June 4, so succumbing to Fear Of Missing Out (FOMO) shouldn't dictate investment strategies," he suggested.

Sit tight for long haul

That said, analysts believe long-term investors should consider India's growth trajectory over the next 3-5 years when deciding on equities.

"The improvement in India Inc's balance sheet strength and the much-improved health of the Indian banking system are positive for the Indian economy. They will ensure that Indian equities will easily manage to deliver double-digit returns in the next 2-3 years with the support of double-digit earnings growth," said a note by Axis Securities.

The brokerage bets on SBI, Bank of Baroda, REC, NTPC, JSW Energy, Suzlon, RVNL, J Kumar Infra, and Hindustan Aeronautics for medium-to-long term.

Gaurang Shah of Geojit Financial, meanwhile, bets on SBI, Canara Bank, ICICI Bank, NCC, HG Infra, NTPC, and Power Grid.

"Our model portfolio remains aligned with the key domestic cyclical themes amid a consistent backdrop of earnings growth. We remain Overweight on financials, consumption, industrials, and real estate. Industrials, consumer discretionary, real Estate, and PSU banks are our key preferred investment themes," said MOFSL.