Banking: Banking and Financial Services players likely vanguards of next surge

Mumbai: In the event of substantial selling pressure, especially in midcap and smallcap stocks, one can contemplate buying large-cap banking or finance stocks, which could minimize downside risks, according to analysts. Both the Nifty Bank and Nifty Financial Services indices have underperformed the broader Nifty index in six months. Stocks such as HDFC Bank, Kotak Bank, SBI, and SBI Cards have also yielded lower returns than the benchmark index.

Analysts believe the banking and financial services sector will spearhead the next market surge in the medium to long term, buoyed by India’s economic expansion driven by capital expenditure, burgeoning credit activity, and an upswing in consumer spending.

“Banking is one sector that has underperformed the broader markets in the last couple of months,” said Devang Mehta, director – of equity advisory at Spark Private Wealth. “A lot of private banks, PSU banks, certain NBFCs, consumer finance companies could probably do well, give and take 5% correction here or there, but most of these banks should be good proxy play candidates to play the economic growth.”

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