The Thai stock market's upside gain is capped and profit-taking is expected on the horizon after Thursday's surge propelled by the recent royal endorsement of the last two of 10 organic bills related to next year's general elections, says Asia Plus Securities.
The brokerage house's forecast is based on historical Stock Exchange of Thailand (SET) index returns six months ahead of the previous six general elections, averaging 0.84%.
Poranee Thongyen, senior executive vice-president at Asia Plus Securities, said investors overreacted to the election progress, as negative global factors still persist.
Several large-cap stocks hardly have any upside gain after the significant rise, she said, and profit-taking is likely.
The SET index next week is expected to hover around 1,700 points.
The benchmark SET index yesterday extended gains, rising 0.3% to 1,722.21 points in brisk turnover worth 58.9 billion baht.
Ms Poranee said foreign investors were net buyers in just two of six historic data sets that tracked SET returns six months before an election.
Investors are recommended to pick laggard stocks that take benefits from the imminent election, rising oil prices and the US-China trade negotiation, she said.
Contractors and construction material stocks and media stocks set to benefit from the election such as CH Karnchang Plc (CK), Seafco Plc (SEAFCO), Siam Cement Plc (SCC), Siam City Cement Plc (SCCC), CP ALL Plc (CAPALL), Berli Jucker Plc (BJC), and Master Ad Plc (MACO), ASP said.
The securities broker also recommended selective buying of stocks with solid fundamentals that are still laggards. These include BANPU Plc (BANPU), Central Plaza Hotel Plc (CENTEL), B.Grimm Power Plc (BGRIM), L.P.N Development Plc (LPN), and Thai Foods Group (TFG).
Capital Nomura Securities said in a note that top picks in the election theme are PTT Plc (PTT), PTT Exploration and Production Plc (PTTEP), Bangkok Bank (BBL) and Kasikornbank (KBANK), CPALL, Robinson Plc (ROBINS), Sino-Thai Engineering and Construction Plc (STEC), Amata Corporation Plc (AMATA), SC Asset Corporation Plc (SC) and Golden Land Property Development Plc (GOLD).
It also recommended Advanced Info Services (ADVANC) and Plan B Media (PLANB).
Yuanta Securities recommend buying domestic plays that gain from election sentiment, including BJC, ROBINS, BBL, KBANK, Siam Commercial Bank (SCB) and Kiatnakin Bank (KKP), AMATA, CK, STEC, Unique Engineering and construction Plc (UNIQ), SCC, and T.K.S. Technologies Plc (TKS).