MOSL: Morning India (12/December/18): 1. India Politics (Congress makes strong gains); 2. Economy (Govt appoints Shaktikanta Das as new RBI governor); 3. Persistent Systems; 4. Economy - FoE
MOrning India (12/December/18): 1. India Politics (Congress makes strong gains in Hindi heartland); 2. Economy (Government appoints Shaktikanta Das as new RBI governor); 3. Persistent Systems (Braced for a change at the top); 4. Economy - FoE
Today’s top research theme
India Politics: Congress makes strong gains in Hindi heartland
- Congress has staged a strong comeback in the Hindi heartland belt (Rajasthan, Chhattisgarh and Madhya Pradesh), where the BJP had enjoyed unparalleled dominance for long. However, it lost its last bastion in north-east - Mizoram. TRS retained Telangana with a thumping majority.
- In our view, there is no direct co-relation between the outcome of these state polls and the Lok Sabha polls (2004, 2009 and 2014 election results point toward the same). That said, we expect closely contested Lok Sabha elections. From a central government policy perspective, we expect the government to turn incrementally more populist in its remaining term before the Code of Conduct for general elections comes into force.
- India's macros have eased off since Oct'18. With the state elections overhang now behind, we expect the focus to revert to fundamentals. Our portfolio construction is biased toward large-caps and also names with strong earnings visibility, resilience to macro risks and reasonable valuations. Our top ideas: ICICI BANK, HDFC, SBI, MARUTI, HUL, TITAN, INFOSYS, L&T, RBL, TEAM LEASE, IGL, INDIAN HOTELS.
Piping hot news
BJP gets a wake-up call for 2019 as Cong roars back in Hindi heartland
- In a one-on-one fight with the BJP in its strongholds, the Congress on Tuesday won Chhattisgarh, was within striking distance of government formation in Rajasthan and was wrestling with a thin lead in a cliffhanger of a contest in Madhya Pradesh till results last came in. In Telangana, the ruling Telangana Rashtriya Samithi (TRS) was comfortably home with 87 seats in the 119-member assembly, while the Mizo National Front (MNF) defeated the Congress in Mizoram with 26 seats in the 40-member State assembly.
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