Talking about the banking or financial sector, their outlook is strong. In most cases, the business has now come close to the pre-covid level.
Banking & Financial Sector Stocks: Due to geopolitical tension, most of the sectors are being affected at the domestic level. In the fall of the market, some quality stocks of the banking and financial sector have also weakened and come near their support level. The brokerage house says that when it comes to the banking or financial sector, their outlook is strong. In most cases, the business has now come close to the pre-covid level. Parameters like loan growth to asset quality have improved. But due to the crisis in Russia and Ukraine, the shares have fallen. For now, investors should take this fall as an opportunity to add quality stocks to their portfolio. After the recent correction, the valuation of the sector has now become reasonable.
Why is there an opportunity to invest in the banking sector?
According to brokerage house Emkay Global, while geopolitical risk has impacted most of the sectors, mortgage loans are currently the key driver for banks. Apart from this, PL/Card and Small Business Loan growth is accelerating. Vehicle finance remains moderate. Commercial vehicle loan growth is also moderate. EMI bounce rates are below pre-covid levels. Due to this the collection efficiency has increased. At the same time, due to the Russia and Ukraine crisis, many banking stocks are trading at better valuations after the correction. So this sector is looking attractive. Now is the right time to invest in quality stocks.
Emkay Global’s Top Picks and Targets
ICICI Bank: Rs 1025 (Return Estimate- 49%)
Axis Bank: Rs 1020 (Return Estimate – 43%)
SBI: Rs 680 (Return Estimate – 47%)
Federal Bank: Rs 130 (Return Estimate – 39%)
INDUSIND Bank: 1350 (Return Estimate- 50%)
HDFC Bank: Rs 2050 (Return Estimate – 50%)
KOTAK Bank: Rs 2300 (Return Estimate- 31%)
BOB: Rs 145 (Return Estimate – 44%)
Growth outlook strong
Brokerage house ICICI Securities has also expressed confidence in the banking sector. The brokerage says that due to poor global cues, there has been a significant fall in the shares of the banking sector. Some stocks have come close to their crucial support level. In such a situation, there is a better investment opportunity. If economic activities increase in the coming days, then the banking or overall BFSI sector will be in the best position to take advantage of this.
Top picks of ICICI Securities: SBI, Axis Bank, Bajaj Finance, SBI Life.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)