Under Prime Minister Narendra Modi’s third term-Modi 3.O, Public Sector Undertakings (PSUs) are expected to perform well due to continued emphasis on infrastructure, manufacturing, and strategic sectors like defense and railways.
1. Historical Performance and Expectations: Historically, PSU stocks have surged following Modi’s election victories. In 2014, the BSE PSU index rose by 82% in 10 months, and by 18% in seven months after the 2019 elections. Similar trends are anticipated post-2024 elections .
2. Policy Continuity: With Nirmala Sitharaman continuing as Finance Minister, policies that have previously benefited PSUs are expected to persist. This includes support for PSU banks, power, energy, and infrastructure sectors .
3. Sector Focus: The Modi 3.0 administration is likely to prioritize capital expenditure in roads, railways, housing, and green energy. Enhanced focus on domestic manufacturing, defense, and infrastructure will benefit PSUs such as Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), GAIL,NTPC, and Power Grid Corporation .
4. Banking and Financial PSUs: PSU banks like SBI, Bank of Baroda, BOI, Central Bank and Punjab National Bank are expected to perform well due to their improved financial health and proactive fund generation strategies. This reflects optimism about sustained business growth and ample liquidity .
5. Railways and Energy: Railway PSUs like IRCTC, IRCON, RVNL and IRFC are anticipated to benefit from potential new reforms and privatization efforts. Energy sector PSUs such as IOCL,BPCL and Coal India are also seen as strong long-term picks .
Overall, the focus on capex, infrastructure development, and supportive policies for PSUs are key factors that analysts believe will drive their performance positively in Modi’s third term.