JP Morgan: Nifty may test 25,000 if BJP wins in 2024 Lok Sabha elections

Nifty50 could test levels of 25,000 if Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) wins a third term in the upcoming Lok Sabha elections, global brokerage firm JPMorgan said in a note while suggesting a buy-on-dips strategy.

The brokerage has picked several stocks as its top bets spanning sectors including indigenous defense, waterways, affordable housing, and manufacturing renaissance, among others.

As elections get going, stock markets go through an extended period of elevated volatility, but indices decline sharply after the conclusion of elections, JPMorgan said.

According to the brokerage firm's bull case scenario estimates, the Nifty50 may inch towards 25,000, driven by further PE (price-to-earnings) rerating led by—

— If the ruling party retains power with an inline or higher-than-expected seat share.

— The RBI starts easing amidst potentially benign US and global macroeconomic outcomes.

The benchmark index Sensex has delivered a 9% return in three months after the general elections since 1991. The broader NSE index, Nifty50 has delivered 8% in six months after the general elections since 1991.

JPMorgan estimates that if the bear case scenario were to pan out, the Nifty50 index may witness a sharp drop and the index could plunge to 16,000. This is a 6,500-points correction from Nifty 50's current market levels.

The brokerage has listed these reasons behind its bear case estimates—

— Election results are unexpected

— Global recession

— Geopolitical tensions

— Higher oil prices

— Higher domestic unemployment

Here are the stock picks by JPMorgan—

Indigenous Defense — Hindustan Aeronautics, Bharat Electronics, Solar, Mazagon, Bharat Dynamics, Cochin Shipyard, Kaynes tech, Data Patterns, BEML, Mishra Dhatu, MTAR Tech

Savers to Investors — HDFC Asset Management (JPM is Overweight), Kfin Tech (neutral), BSE, Nippon, Motilal, 360 One, Angel One, MCX, Nuvama, CAMS, CDSL, UTI AMC, Aditya Birla Sun life

Waterways — Container Corp (neutral), Adani Ports, Thermax, Mazagon, JSW Infra, SCI, ION Exchange, KNR, ITD, Va Tech, Welspun Ent

Affordable Housing — Pidilite (overweight), Macrotech (Neutral), Prestige (OW), LIC Housing (OW)

Ultratech, Ambuja, Shree Cement, ACC, Dalmia, JK Cement, Brigade, PNB Housing, Piramal Ent, NCC, Can Fin Homes, etc

Manufacturing — L&T, Siemens, ABB, BHEL, Cummins, Tube Investments, Thermax, Rail Vikas, Voltas, AIA Eng, Apar, Grindwell, IRCON, Elgi, Graphite, EIL, Voltamp

Electronics Manf — Havells (Neutral), Polycab, Dixon, Whirlpool, Kaynes, Amber, Bajaj Electricals, Cyient DLM

The general election, which begins on April 19, will be held in seven stages until June 1. The counting of votes will take place on June 4 and results are expected on the same day.

(With inputs from Ekta Batra)