India’s stock market has been topsy-turvy in the past week. Markets hit all-time highs on Monday following news of a potential hat-trick for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) but eventually tumbled after it began losing its parliamentary majority. The shock outcome of the mammoth election count means Modi will now have to rely on smaller parties to form a governing majority in the 543-member Lok Sabha, or lower house of India’s parliament. Such a phenomenon raises “concerns about policy continuity, economic reforms, and overall investment climate [causing] increased market volatility, potential capital outflows, and a slowdown in both foreign direct investment and domestic investment,” Dhruba Jyoti Sengupta, CEO of Wrise Private Middle East, told CNBC Pro on June 5. The Nifty 50 plunged 5.93% on Tuesday, while the BSE Sensex lost 5.74%, marking their largest loss since 2020 . Overall, the BSE Sensex index — which includes 30 well-established stocks on the Bombay Stock Exchange — is up around 6.8% over the last six months, while the benchmark Nifty 50 index is 8.04% higher. WealthMills Securities’ equity market strategist Kranthi Bathini says “India’s stock markets need stable policy continuity going forward.” For his part, Sengupta — whose firm serves ultra-high-net-worth and high-net-worth individuals across Asia, the Middle East and Europe — is looking at more long-term investment opportunities in India. “India’s bull run will continue to be supported by factors like favorable demographics, comprehensive economic reforms, infrastructure development, digital transformation, manufacturing growth, robust FDI [foreign direct investments], financial market development, rising consumption, sustainable development initiatives, and strategic geopolitical positioning.” Infrastructure plays One segment Sengupta is looking at for the long term is infrastructure, thanks to a combination of government initiatives, policy reforms and private sector participation over the next five years. “The Union Budget has consistently increased allocations for infrastructure development. Every budget over the next few years is expected to continue this trend, with substantial funds earmarked for roads, railways, airports, and other critical infrastructure,” he added. Among the pure-play infrastructure companies on his watch are utilities company NHPC , electricity operator NTPC and mining player Hindustan Copper . He has also set his sights on railway companies like Indian Railway Catering and Tourism Corporation, Indian Railway Construction International and Titagarh Rail Systems amid the nation’s plans to create high-speed rail corridors, modernize existing infrastructure and improve passenger amenities. Strong digital economy and startup ecosystem Another longer-term theme on Sengupta’s radar is the digital economy and startup ecosystem. The wealth manager expects the new Indian government to boost digital infrastructure, which he said will in turn increase funding and investment and technological innovation, and foster a more skilled labor force. “These changes will position India as a global hub for innovation, entrepreneurship, and digital services, fostering sustainable economic development and inclusive growth,” he said, naming sectors like biotechnology, agritech, fintech and cleantech. Stocks that Sengupta expects will benefit from this trend include financial services providers like Canara Bank and Bajaj Finance which will offer capital to support the entire startup ecosystem. Riding the consumer wave Aside from sectors poised for growth, WealthMills Securities’ Bathini suggests looking out for names set to benefit from the strong consumer. These include fashion label Titan , aerospace and defense company Hindustan Aeronautics as well as heavy-weight conglomerates like Tata Motors and the Adani-owned Reliance Industries . These are companies that “can be bought in the long-term as the consumption and capital expenditure cycle going to be in uptrend in India,” as the domestic population — and, more importantly, the middle income bracket — increases, Bathini added.
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