Following the unexpected election outcome where Prime Minister Narendra Modi’s BJP failed to secure an outright majority, the Nifty target has been revised downward to 22,000 from 24,000. While an extended bear market has been ruled out, zero returns are anticipated for the Nifty over the next 12 months.
Significant changes have been made to a model portfolio, with stocks like Zomato, Delhivery (due to valuations and weak earnings structure), Ambuja Cements (high valuations), ITC (budget risks), Motherson Sumi Wiring, and ONGC (exiting PSUs) being removed. This decision reflects an assessment of these stocks’ potential performance in the current market conditions.
While it is believed that the economic direction is unlikely to change significantly over the next 2-3 years, it acknowledges that some structural reforms may now be placed on the back-burner. This view is based on the BJP’s inability to secure an outright majority, which could potentially impact the government’s reform agenda.
