Investors betting big on cap good, infra stocks after strong BJP showing

Business

oi-Sunil

By Sunil Fernandes

Published: Monday, December 9, 2013, 9:58 [IST]

After months of languishing at ridiculously low levels, capital good, infra and PSU banking stocks are seeing some signs of life.

In today's trade all of the stocks from the sector rallied sharply, following a strong BJP showing in the state elections. The hopes are that Narendra Modi would become the Prime Minister after a strong momentum in the state elections, which could see economic revival and also revival of the capex cycle.

The first to benefit from a Modi led government would be the capital goods, infra and PSU stocks, which all rallied today in trade. The belief is that the economy would revive and the first to benefit would be stocks from these sectors.

Among the notable gainers once again was Bharat Heavy Electricals, Voltas, Crompton and Greaves Larsen and Toubro among others.

Banking stocks, particularly PSU banking stocks surged in trade today with notable gainers being Canara Bank, Oriental Bank of Commerce, Punjab National Bank, among others.

It's likely that these stocks would continue to rally at least for the next few days. It's not clear as to where they would stop, given that they have gone up strongly in the last few weeks.

The only hitch for these stocks now is the fact there is a likelihood that the Fed would announce its QE3 tapering programme, which should act as a spoke in the wheel for some of these stocks.

The RBI is also likely to meet to announce its monetary policy which should see some profit booking in these stocks, if there is an interest rate hike.

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