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As exit polls suggest thumping victory for Modi, experts pick these 10 stocks

Experts feel that anything above 270 for BJP on May 23rd will be positive for markets. Although some of the good news is already discounted by the market, hence, profit booking is likely

Exit polls suggest continuity of a stable government at the Centre—a positive sign for long-term investors. Any dips ahead should be used as a buying opportunity.
According to an exit poll conducted by Network 18-IPSOS, BJP-led NDA is likely to gather over 336 seats. Republic-CVoter sees BJP hitting 287 while Congress gaining about 128 seats.
Experts feel that anything above 270 for BJP on May 23 will be positive for markets. Although some of the good news is already discounted by the market; hence, profit booking is likely, once the initial euphoria wanes.
“In the past five elections, barring the short-term correction immediately after the result outcome, the inherent trend of the market has remained intact,” Umesh Mehta, Head of Research, SAMCO Securities told Moneycontrol.
“Therefore, investors should not rejig their portfolio post elections and if they have conviction in the quality of the stock, should hold on to it as fruits of patience are always sweet,” he said.
We have collated a list of fundamentally strong stocks from different experts that investors can look for buying on dips. For selecting stocks analysts have worked with an assumption of a stable government:
The Bank is often regarded as the bellwether of India’s economy. The asset quality continues to improve with Gross NPA at 7.53 percent in the March quarter compared to 10.9 percent recorded in the year-ago period.
The Net Interest Income (NII) has also improved. We expect a return on equity (ROE) of the bank to improve in FY20 on the back of improving asset quality and recovery in the credit growth.
The credit quality has improved and we believe that the bank is on its way to recovery. The underlying loan growth is healthy and the bank is also diversifying its loan book to make it less risky. The ROE of the bank should improve significantly in FY20.
Tata Steel:
The demand for metals should improve on the back of a cyclical recovery in the economy, which we believe will happen after Q2FY20, the valuations are also attractive.
Larsen & Toubro:
L&T will be the key beneficiary of a pickup in capex spending and we also expect the company’s margins and ROE to improve going forward.
Mahindra & Mahindra:
The valuations are attractive and will benefit from a recovery in consumer demand as well as focus on agriculture in the coming years.
The private sector lender has continued to display strong earnings growth momentum, supported by strong advances growth, stable NIMs, steady cost structure and low credit costs.
Operating expenses are under control due to digital initiatives undertaken by the bank. Stable asset quality, superior corporate governance, and solid performance make HDFC Bank attractive at current levels.
We believe HDFC Bank will be able to deliver profit growth at the rate of 20-22 percent CAGR for at-least five more years. We have a buy rating on the stock with a price target of Rs 2,500.
Stable asset quality, superior corporate governance, and solid performance make HDFC attractive. HDFC has been able to grow its loan book by 18-20 percent in the March quarter, which we believe should continue for coming years as well.
Value unlocking by listing of subsidiaries and equity infusion will help HDFC to raise funds and maintain its net interest margins (NIMs).
We expect HDFC to deliver 15 percent AUM CAGR over FY19-21, driven by 17 percent CAGR in the retail business. Growth over the last two years was driven by volumes rather than value, which is positive.
We expect this trend to continue, especially given the strong macro tailwinds in the lower ticket size segment. We believe HDFC will continue to outperform Nifty, hence, we recommend buying.
Tata Consultancy Services:
We believe TCS will outperform industry growth rate and will continue to gain market share. The management is quite confident of posting double-digit growth in the foreseeable future.
However, the margin may remain under pressure in the near-term. There are some macro concerns in the US, which will put some pressure on the stock in the near future.
However, we are positive on the company in mid to long-term. We advise investors to buy the stock with a target price of Rs 2,600.
Reliance Industries:
Reliance Industries is steadily transforming itself from petrochemical to retail, telecom and digital services. We believe the petchem, retail and digital services will continue to perform well in the coming quarters. In telecom biz, management targets to achieve a subscriber base of 400 mn by FY20.
Trials for JioGiga Fibre services for Homes and Enterprise is being rolled out across 1,600 cities where it is optimising its service offerings across fixed broadband, entertainment and IoT based smart home solutions.
It also plans to grow big in online shopping and E-money, where it has already started to build an app that can provide seamless and quick transition across grocery to fashion to electronics. We see huge potential in Reliance going ahead and recommend to buy with a target price of Rs 1,600.
Bajaj Finance:
Bajaj Finance is the largest consumer durables and lifestyle financier in India and has been continuously gaining market share in these businesses. Continuous market share gain and strong distribution have created entry barriers for competitors.
One of the key strengths that Bajaj Finance has built over time is a quick turnaround time which is unmatched by most other retail financiers.
Thus, other than purchases on credit cards of banks, there are very few other competitors that Bajaj Finance sees in the consumer durables business, which provides it with pricing power.
It is also diversifying successfully into personal loans, overdraft facility that can be seen as a natural extension of consumer finance. We recommend a buy with a price target of Rs 3,500.


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