Stock market seems to have its own favourites when it comes to betting on the polls-related consumption boom this election season and some of them include shares of automakers, liquor firms, telcos and media companies.
With the battle for electoral supremacy picking up a fervent pace, nimble-footed fund managers, high net-worth investors and even some foreign institutions are buying into these "consumption plays" available once every five years alongside LS polls. Not to be left behind, retail investors are also buying these shares to reap polls-related gains, pushing the share prices of many of these companies higher by 10-50 per cent in the past one month.
While the benchmark index Sensex has itself gained about 6.8 per cent in 30 days and is above 22,500 level after hitting record highs for the eighth straight session, stocks perceived to benefit from elections have shot up as much as 50 per cent in a month.
Even as bets on the new government getting a strong mandate are abound in what some say is a sure-shot 'hope rally', experts feel many listed firms are likely to benefit, at least in the short-term, from poll-related spending. This is driving investor interest in these counters, amid rising trading volumes.
"Poll-related spending comes into listed firms through media, automobiles, telecommunications, paper, liquor etc. Investors pick up fundamentally strong shares and hold them to benefit from this sentiment. It can land good gains pretty quick but is risky as well," said Alex Mathews, Head Research, Geojit BNP Paribas.
Makers of automobiles, including two-wheelers, cars, jeeps, SUVs and trucks, are said to benefit from poll managers spending big bucks on mobilising people for rallies. Hero Motocorp, TVS Motor, Maruti Suzuki, Force Motors and Eicher Motors have seen share prices spurting by 10-50 per cent in just a month.
Shares of breweries and distilleries are also witnessing good demand. Political parties as well as individual candidates are known to open their purses for luring voters. Besides tobacco products like cigarettes, distribution of free liquor is rampant in many rural and semi-urban areas in the run-up to actual polling day. Investors seem to be betting on this trend and shares of Empee Distilleries, Globus Spirits and Som Distilleries have outperformed Sensex in the past one month.
Tilaknagar Industries has given around 10 per cent gains. Scrips of United Spirits, the most popular among them, has shot up by 14 per cent