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A gauge of volatility in Indian stocks has risen in its longest streak ever, underscoring growing uncertainty over the outcome of the nation’s general elections as polling gets underway.The India NSE Volatility Index — which uses equity option prices to measure expected market swings over the next 30 days — is heading for its 11th consecutive session of gains. The so-called fear gauge has jumped as much as 88% from a low in April amid speculation that Prime Minister Narendra Modi’s party may win fewer seats than initially expected. 109979812While the incumbent party is still widely expected to win a third term, a smaller majority may affect the government’s ability to carry out policy reforms such as those aimed at revamping India’s infrastructure and boosting its presence in global supply chains as a potential alternative to China.“We reckon that 400+ seats seem unlikely” for the Bharatiya Janata Party-led alliance, Phillipcapital India Pvt. analysts Anjali Verma and Navaneeth Vijayan wrote in a note. “The turnout so far is a tad lower and while this could affect the outcome for a few constituencies, it is unlikely to majorly dent the widely expected outcome of BJP returning to power.”The South Asian nation has voted on more than half of the 543 seats up for grabs in the lower house of the parliament in a seven phase polling that will conclude on June 1. Votes will be counted on June 4.An increase in volatility during elections is not unusual. In 2019, the index climbed over 20% in the month leading to the counting of votes.

Global brokerage firm Nomura initiated coverage on PSUs Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) with a ‘buy’ rating and a target price of Rs 4,750 and Rs 300, respectively. This signals an upside potential of 23% for HAL and 30% for BEL from their current market price.The brokerage firm bets on HAL for its strong moat in fighter aircraft and helicopters, and significant capability upgrade that provides basis for the development of the indigenous engine program and BEL, for its increased visibility on order inflows, conviction on margins delivery and expansion in returns ratios.India's defence sector is witnessing significant growth driven by increasing defencebudgets, modernisation efforts, and the government's emphasis on indigenousmanufacturing through initiatives like "Make in India” while the country’s location in the geopolitically significant South Asian region makes defence a priority area for national security as it continues to strengthen its defence capabilities to address regional security challenges.Here is what the brokerage said while commenting on the defence stocks:HALNomura sees a potential for re-rating as the value opportunity of Rs 3.9 lakh crore over the next eight years provides growth visibility as HAL's capability has upgraded significantly due to the GE deal for manufacturing of complex fighter jet engines, providing autonomy for development of future fighter jet programs like Kaveri.“We believe its valuation would sustain at the higher end of 22x -42x 1-year forward PE. We expect revenue, EBITDA, and PAT to register respective CAGRs of 14%, 11%, 23% over FY23-26F. We value HAL at 38x (implied PE of 32-43x based on DCF) FY26 earnings, with a target price of INR4,750 and initiate coverage at Buy,” stated Nomura.BELUnderpinned by a strong order backlog of Rs 76,000 crore (3.86x TTM sales) and bolstered by a robust order pipeline, Nomura stated that it expects BEL to sustain secular growth, driven by market dominance and increased project sizes as it further ascends the value chain as a system integrator.“We forecast ROEs to increase to 27.7% in FY26F from 23.5% in FY23. We value the stock at 40x FY26F EPS (50% premium to +1SD), with a TP of INR300 reflecting improved visibility, a strong competitive moat, and a well-established presence in significant defence contracts,” the brokerage firm added.The shares of HAL were trading flat at Rs 3863.35 while BEL was trading nearly 1% lower at Rs 230 on BSE around 12:30 pm.Also read: Muthoot Finance and Manappuram Finance shares tank up to 9% after RBI advisory(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)