Get ready to ride the fourth wave on D-Street! Here's how

MUMBAI: How should investors ride the stunning rally in Dalal Street? A report by brokerage Ambit Capital offers three strategies to benefit from possible policy resets:

*First, pick "good and clean companies" that are currently trading below their historical valuations. It suggests stocks Bajaj Auto, ICICI Bank and L&T.

*Second, make a mental note of three mega themes: industrial exports, aspirational consumption from rural India and turnaround plays in light industrial manufacturing. Here, said Ambit, the possible stocks could be Cummins India, M&M, Bajaj Electricals and Apollo Tyres.

*And, third, play on the intersection of these mega-themes with companies like TVS Motors, Eicher Motors and Supreme Industries.

According to the report, the country has seen three waves in the past 30 years, each marking a political reset that lifted the economy and the stock markets. "Now with opinion polls pointing to an NDA coalition winning the most seats in the coming General Elections, India stands on the cusp of its 'Fourth Wave'," it said. The Sensex clocked an average 27% annualised return in the two-year period immediately after the elections.

A likely Modi-led government at the Centre would bring in a renewed focus on revival of sectors like infrastructure and banking, and reforms in labour and agriculture. The report also hints at rolling back extensive social welfare policies in the event of such a political outcome.

Over the past decade, consumption and investment in India have never moved in sync with each other and this has created macro imbalances. The NDA's policies have the potential to allow consumption and investment to grow in sync and this creates a new set of investment opportunities focused on companies, it said.