Latest news with #KaitavShah
Time of India
01-07-2025
- Business
- Time of India
PSU Bank Index up 2.5% on FinMin call for monetisation
Mumbai: The Nifty PSU Bank Index jumped more than 2.5% Monday after the finance ministry urged these lenders to offer more credit and monetise subsidiaries through IPOs and stake sales. They bucked the declines in the rest of the banking space. The Nifty PSU Bank Index gained 2.7%, while the Bank Nifty and benchmark Nifty lost 0.2% and 0.5%, respectively. All 12 stocks in the PSU Bank index closed higher. Bank of Maharashtra soared 5.3% while Punjab National Bank and Bank of Baroda rallied 3.9% and 3% respectively. Union Bank, Canara Bank, UCO Bank and Indian Bank gained over 2.5% each. Analysts said the gains could be limited but PSU Banks could outperform its private peers in the near term. "Although it was known, recent nudge to public sector lenders by finance minister to monetise their subsidiaries via IPOs and stake sales led to uptick in these stocks as the managements of these banks are expected to start working on the same," said Kaitav Shah, Lead BFSI Analyst, Anand Rathi Institutional Equities. "SBI is our top stock pick as it has multiple catalysts in place and its fund-raising would be book accretive." Shah said that the gains could fizzle out as it was largely a knee jerk reaction as bond yields have hardened post the interest rate cut and net interest margin compression is also anticipated. So far this year, the Nifty PSU Bank Index gained 10.1% while the benchmark Nifty index rose 7.5% in the same period. "The finance minister urged PSU banks to raise credit growth which was perceived positively," said Vishal Narnolia, AVP research, ICICI Securities. "PSU Banks can outperform private peers in the near term due to limited margin compression given their better Current Account Savings Account (CASA) ratio and lower Credit-Deposit (CD) ratio." Narnolia said that the valuations in the sector are also reasonable and there is room for further upside potential in these stocks in the near-term. Shrikant Chouhan, head of research, Kotak Securities said despite encouraging results, investors should not be swayed solely by short-term momentum and has a positive view on State Bank of India and Union Bank of India.
Reuters
28-03-2025
- Business
- Reuters
India's financial stocks fuel Nifty 50's March comeback, set for strong FY2026
March 28 (Reuters) - Shares of India's financial services sector companies recovered in March, leading the benchmark Nifty 50 index's comeback from a historic downturn and setting the stage for a robust fiscal year 2026. With the Reserve Bank of India's interest rate cuts looming, credit growth surging, and foreign inflows returning, financials are once again the market's hottest bet. Potential rate cuts and liquidity injection by the central bank are likely to improve the overall credit and deposit environment and earnings for banks in FY2026, Anand Rathi Research's analyst Kaitav Shah said. Financials (.NIFTYFIN), opens new tab, accounting for 37% weight in the Nifty 50 (.NSEI), opens new tab, jumped about 9% in March after three straight monthly losses. It helped the NSE benchmark index reverse losses in the fiscal year, after about $1 trillion in investor wealth was wiped out during a downturn in the second half. The Nifty 50 had touched a record high in September. In FY2025, financials gained nearly 20% and banks (.NSEBANK), opens new tab rose 9%, outperforming the Nifty 50's 5% rise. The sector has also benefited from foreign inflows, opens new tab returning in March after sustained selling. Still, foreign portfolio investors (FPIs) have offloaded Indian shares worth a record $26 billion since October, marking the highest outflows in a six-month period, pushing benchmark indexes into a correction territory in November and the broader markets into a bear market last month. For FY2026, the banking sector is expected to remain strong, with projected credit growth of 12-13% on strong services and retail demand. "Since banking is the ideal proxy to economic growth, it should see better credit and deposit growth in FY2026," said Mayuresh Joshi of financial services firm William O'Neil and Company. BNP Paribas analyst Santanu Chakrabarti echoed Joshi's sentiment. "Besides liquidity infusion, changes in non-bank lenders' risk weights, relaxed priority sector lending norms, and reduced foreign selling pressure keep our bullish FY2026 outlook intact." The RBI is widely expected to cut rates by 25 basis points in April and again in August, easing funding costs and supporting credit expansion. Despite FPIs selling financial stocks worth $6.7 billion in FY2025, roughly 41% of total outflows, the sector ended the year higher on attractive valuations. The Nifty financial services index trades at a 12-month forward price-to-earnings (P/E) ratio of 20x, below the 10-month average of 20.6x, suggesting undervaluation which could lead to further investments. ($1 = 85.5850 Indian rupees)
