Check out these election-proof sectors; Are you invested in them?

General elections have always been a major event for the stock markets, which introduces a lot of uncertainty among investors, thanks to increased volatility. Markets have turned jittery of late due to the low voter turnout and intense competition in certain states.
There are certain sectors that are more sensitive to the possible electoral outcomes. On the other hand, some sectors maintain their resilience regardless of the results, as no party or coalition will introduce any policy that could hinder their growth trajectory. Here are the few sectors that would not be affected by who comes to power, according to six portfolio managers.

Automobiles
“The auto sector is unlikely to be significantly affected by the election results, as consumer demand remains stable due to economic conditions, demographic trends, and technological advancements,” says Nirav Karkera, Head of Research at Fisdom. Both the incumbent BJP-led government and the opposition Congress party have demonstrated a commitment to supporting the auto industry, suggesting continuity in policies regardless of electoral outcomes, Karkera adds.
Siddhartha Bhaiya, Managing Director and CIO of Aequitas Investments, explains, “While government policies on taxation and manufacturing incentives can affect the industry, the core demand for non-EV vehicles is influenced more by factors like income levels, urbanisation, and fuel prices, which are less subject to short-term political changes”.

Power
The power sector is likely to remain resilient regardless of the results. “The power sector’s stability is underpinned by its demand-driven nature, and the focus on renewable energy of both the political dispensations, as reflected in their manifestos” explains Karkera.

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Consumer Goods
The consumer goods sector is cited as a prudent defensive hedge against election results. Sandip Sabharwal, an independent market expert, says, “Demand for consumer goods has been subdued due to high inflation, and not related to government policies. The demand should revive going ahead, as inflation is moderating and there is the possibility of normal monsoons.”

Technology
Tech stocks are also among the resilient ones as their performance is more dependent on overseas cues, says Sabharwal.

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Insurance
“Insurance is one sector that’s relatively insulated from election outcomes,’’ says P Krishnan, MD and CIO, Spark Asia Impact Managers. While the valuations do not present a big margin of safety, which is the case across the market, some stocks in this sector are well-placed as their penetration and adoption continue to be drivers, demand dynamics are intact, and execution has been very good, Krishnan adds.

Fertilisers and chemicals
No government of any dispensation may initiate measures that will harm the farm sector, says Krishnan. These stocks are not very expensive currently, he adds.

Telecom
The sector has already borne the brunt of policy measures, new norms, auction rules, etc., says Krishnan. Also, the demand is defensive. Hence there will be no significant impact because of the election results, he adds.

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Pharma
Deepak Jasani, Head, Retail Research, HDFC securities, says, “No government formed by any party or coalition may introduce any policy that can disrupt the growth trajectory of the pharma industry.”

Global commodities
The elections are expected to pay an insignificant role in global commodity prices, says Bhaiya. “In the last two-three months, the prices of most global commodities have increased between 20-30 percent. Aluminium is at a two-year high, and copper also hit an all-time high recently. The primary reason for the increase in prices is the geopolitical scenario. China is also coming back strongly to incentivise their property market. This will have a negative impact as far as input prices are concerned for most of our manufacturing sector,” he adds.

Manufacturing
Manufacturing, as a theme, is likely to do well going ahead, irrespective of the election results, says Swarup Anand Mohanty, CEO, Mirae Asset Investment Managers. “It is 15years of secular growth for India. This is the beginning. If one wants to catch any theme early, it is manufacturing, in India,’’ adds Mohanty.
“The process is started with PLIs. Today, our corporate tax rate is aligned with that of the world at large, and our wages are one of the lowest. Thanks to China+1, global giants are setting up their base in India. And our demography is a force that will help us power into the future,’’ Mohanty believes.
(Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)

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