Best PSU Stocks to Buy During Election

Public Sector Undertakings or PSU stocks are companies owned by the state of the central government. These are the companies established by the government to carry out commercial activities in various sectors of the economy.

During an election season, the ruling party often comes up with various new reforms and policies that might directly impact the PSU stocks. It can either make the stock run up or temporarily stop its growth.

In this article, we’ll discuss the top-performing PSU stocks during elections and why they could be profitable investments for your portfolio.

Role of PSU Stocks During Elections

Government policies highly influence the stock market during the election season. The outcome of elections gives rise to new government policies that impact the PSU companies directly. These include companies related to infrastructure, energy, banking, and defence.

Continuous growth or surge in PSU stocks tend to create a sense of political stability and belief in the government. Additionally, PSU stocks often show significant volatility during the election season, depending on the market sentiment and investor behaviour. 

Therefore, investors should prioritise PSU stocks with a long-term perspective when making investment decisions during election periods.

List of Best PSU Stocks to Consider During Elections

Here are the top-performing PSU stocks to consider adding to your portfolio during elections.

● Oil and Natural Gas Corporation (ONGC): The Oil and Natural Gas Corporation can be one of the most secure election season PSU stock picks for your portfolio. With a dominant position in the energy sector in India, the stock is known to significantly contribute towards the domestic oil and gas production in the country.

The stock trades at Rs 282 and has given massive returns of around 49% in the past six months. With a large market cap of 3.5L Cr, ONGC can be a multi-bagger for your portfolio in the upcoming days post-election.

● NTPC Limited: With an impressive power capacity of 62,110 MW, NTPC is a strong PSU stock on the stock market. The company is involved in various business lines, including coal mining, oil and gas exploration, power generation, etc.

Trading at Rs 356 on the National Stock Exchange, NTPC has given around 52% returns in the past six months. Moreover, with the chances of the current government being elected again, the power and renewable energy sector is expected to experience significant growth. This will ultimately be reflected in the NTPC stock prices reaching new heights and yielding massive profits.

● Power Grid Corporation of India Limited: Established in 1989, the Power Grid Corporation of India is another prominent leader in the country's power and energy sector. PGCIL is responsible for about 50% of India’s total power generation. 

With such a massive influence on the Indian power sector, PGCIL can be a solid stock to consider adding to your portfolio. The stock trades at Rs 292 and has given around 45% returns in the past six months. Thus, adding the stock to your portfolio during the election might yield heavy profits in the future.

● Coal India Limited: Another strong PSU stock to consider during the 2024 election season is Coal India Limited. Coal India has recently hit a revenue milestone, generating Rs 142,081 over the past financial year. This has put the company's stock in a strong position, with a revenue growth of 27% and an ROE of 49%. 

Being one of the best PSU stocks in India, Coal India can be an outstanding stock to consider during the election season. The stock is available on the National Stock Exchange for Rs 455 and has generated returns of around 44% in the past six months.

● Indian Oil Corporation: Indian Oil Corporation is amongst the largest oil-providing companies in the country. With a massive market influence on the country's oil sector, Indian Oil can be among the excellent election season PSU stock picks to add to your investment portfolio. 

Trading currently at Rs 171, the stock has already been a multi-bagger for its investors, with a return of around 94% in the past six months. However, it is still expected to show even higher returns post-election season. This can be the perfect opportunity to build more positions on the stock for better returns in the future.

Things to Consider Before Investing in PSU Stocks During Elections

As the election season approaches, many PSU stocks may be reaching their all-time highs. However, there are several key factors to consider before investing in them.

It’s important to note that it has been a trend in the stock market for the past 20 years for  PSU stocks to experience significant increases during the election period. Moreover, any sudden announcement or policy change from the government can have a massive impact on these stocks. 

Additionally, overvalued PSU stocks often return to their original value once the election season ends. Therefore, investors must be prepared to exit quickly to minimise the risk of heavy losses.

Conclusion

Investing in  PSU stocks can be a great opportunity during the election season. PSU stocks are known to show substantial returns during the pre-election season, so investors should be ready to take advantage of them and maximise profits during this period.