Stocks of companies related to the infrastructure and construction sectors, including those of CV makers, corrected sharply after results showed that the ruling Bharatiya Janata Party may not be able to retain power without depending on allies. Shares of Hero MotoCorp were up 3% as the company stands to benefit from an increased focus on the rural economy.
04 Jun 2024 | 4647 Views | By Sreejiraj Eluvangal
Stocks of companies related to the infrastructure and construction sectors, including those of CV makers, corrected sharply after results showed that the ruling Bharatiya Janata Party may not be able to retain power without depending on allies. Shares of Hero MotoCorp were up 3% as the company stands to benefit ...
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Stocks of companies related to the infrastructure and construction sectors, including those of CV makers, corrected sharply after results showed that the ruling Bharatiya Janata Party may not be able to retain power without depending on allies. Shares of Hero MotoCorp were up 3% as the company stands to benefit from an increased focus on the rural economy.
Among the biggest losers were BEML or Bharat Earth Movers Ltd, which makes earth moving equipment and heavy duty trucks, auto and engineering components maker Bharat Forge, and construction companies such as Larsen & Toubro and HCC.
While BEML shares were down 19%, those of Ashok Leyland, one of India’s top CV makers, were down 12%. Olectra Geentech Ltd, which makes electric buses, also was down 9%, while Hindustan Aeronautics was down 17%.
Separately, shares of construction companies such as L&T were also down around 10%.
According to market participants, there is a widespread apprehension that the reverses suffered by the current, BJP-led coalition in the general election will force the alliance to focus more on driving consumption via subsidies, and take some of the focus away from investment.
The Narendra Modi-led government has been focusing on boosting India’s economic growth by channeling more and more funds towards long-term investments, such as the construction of roads, ports, bridges and so on.
While this was good news for companies involved in this sector, such as BEML, Ashok Leyland, L&T etc, the diversion of funds away from consumption into investment crimped growth for consumption-oriented companies, such as Hindustan Unilever and Hero MotoCorp.
As a result, the poor performance by the NDA has led to a rally in these stocks, with Hero MotoCorp up 3% and HUL – which makes soaps, shampoos, and other items of daily use – up 6%.