Want To Gamble Big On Elections? Check Our Top 10 Stock Picks

The Indian stock markets will see a big swing on election results day, say experts.

A move of 10-20% on the markets is what analysts are betting on. In this backdrop, if you want to make big money playing on elections, here's your chance. We give you 10 high beta stocks.

Playing on these 10 stocks, if the Sensex rises 1%, they could return about 2%.

But then the loss could also be in the same proportion if the Sensex slips.

Leading fund houses such as Citi, BNP Paribas, Deutsche Bank and others are advising investors to add better-quality, high-beta stocks from the finance and banking space such as ICICI Bank and Axis Bank, reports ET. L&T is recommended from the industrial sector while Maruti and Titan are the bets from the consumer discretionary segment.

Here are 10 stocks with high beta (see chart).

How to read the chart? For example, ICICI Bank has beta of 1.9 while Axis Bank 1.7, which means if the Sensex rises 1%, then these stocks will climb by close to 2%.

A beta of greater than 1 indicates that the stock price will rise or fall more than the market.




What experts/brokers say about the current market rally:

Marc Faber, author of Gloom Boom & Doom Report

We are moving into an election and there is hope that the BJP, led by Modi, will win this election and be able to form a workable government."

Mehraboon Irani of Nirmal Bang Securities

This can be described in one sentence as a 100% Narendra Modi rally. The hope has come in that macro factors will improve.

Stocks in most sectors rallied but ultimately at the end of it all I can promise that the shirts are going to be off if the election verdict is something different.

If there is a case of a hung Parliament, the market will come down to 5%-7% in a day. So, we are honestly very sticky wicket as of now despite the fact that we are high but if you ask me the risk trade is on but honestly fundamentals have not improved much.

CLSA

Despite the short-term overbought readings, we would respect the Nifty’s conclusive breakout above 6,383-6,480 resistance with the daily momentum indicators confirming this move.

This breakout opens the door for a move up to the 7,036 area, the measured move objective from the November 2013-March 2014 trading range.

  Lalit Nambiar of UTI Mutual Fund

The ability of the market to predict an election outcome hasn't been very good, so I would be a little sceptical about the current rally.

We are still a little way away, a long way probably, from economic recovery. So, maybe the market is a little ahead of itself ... Maybe there's a bit of overoptimism in this particular rally.

When we look at these new highs, it is essentially an index level and in an economy which is growing at an average of 5% to 7%, you will obviously see earnings also grow and to that extent, index hopefully will continue to hit new highs in the future. So, there is too much being tied into this new high factor.

Pankaj Murarka, Head Equity, Axis MF

If you look in retrospect, it's been about six years that the index has been virtually flat; and during the process if you look back our economy has gone from a trillion dollar economy to $1.8 trillion economy. This has happened in the backdrop of a 50% depreciation in the INR versus dollar. So, effectively from a valuation perspective the markets are about 50% cheaper than what they were when they hit 21,000 last time."

So, we think the markets are trading below their mean valuation and we feel pretty positive about equities as an asset class going forward.

Richard Jerram, Chief Economist, Bank of Singapore

Markets are looking at the prospects of political-led policy change, maybe more effective policy implementation post elections ... they are buying on the hope that some structural barriers that have been a real problem over the last few years would begin to diminish after the elections.