Stocks to buy: After rise in Bank Nifty index by over 21 per cent in 2022, retail investors are in limbo whether rally in banking stocks will continue or its time to book profit and look at other theme for next year. However, if we go with market experts’ views, rally in mid-sized PSU bank stocks and tech-enabled lenders in private space may continue in 2023 as well. They said that due to government of India’s initiative to tackle bad loans, banks are expected to deliver strong quarterly numbers for medium to long term and PSU banks are expected to match private banks in banking business.
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Stock market experts further added that ease in dollar index has made overseas loan dearer for big corporates and hence such corporates are coming back to Indian banking system for credit line. This is also going to aide PSU banking stocks in medium to long term. However, in private segment, those banks who have focussed in tech-enabled lending are going to score over its peers and banks like Axis Bank, ICICI Bank, HDFC Bank and IDFC First Bank are expected to benefit from such emerging business model in India. For retail investors who are looking to cash-in the opportunities available in the banking space but have limited money for investing, experts recommended mid-sized PSU and private bank stocks to buy. They said that Yes Bank, PNB, IDFC First Bank, Bank of Baroda, etc. shares to buy.
Batting in favour of banking theme for medium to long term, Sandeep Pandey, Business Partner at Emkay Global Financial Services said, “Finance Ministry’s idea of handling bad loans through ARC is going to have a big impact on Indian banking system. Now, the system is providing a window of opportunity to those lenders who are under the stress of bad loans. Now, the bad loan won’t force any bank to continue provisioning for long and remain under the NPA stress.”
Former Deputy Vice President of HDFC Bank Ltd said that the bad loan initiative by the central government has equipped state-owned banks to match with private players. So, market is positive on PSU banks as they are available at high discount against its peers in private space.
On why bank stocks would continue to rally, Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal said, “In the wake of rising US dollar, big corporates had moved to overseas for credit line but after ease in US dollar, these large corporates are expected come back to Indian banking system. This is going to impact Indian banks’ margins positively. Apart from this, high interest rate regime is also going work in favour of Indian banks. So, banks’ profitability and margins are expected to improve for medium to long term and hence one should continue to remain invested in banking stocks as bank theme is going to work for medium to long term.”
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Stocks in focus
Motilal Oswal expert further added that tech-enabled private lenders are going to benefit more against its peers and hence Axis Bank, ICICI Bank, HDFC Bank and IDFC First Bank shares are expected to remain in focus.
Advising high risk traders to look at Yes Bank as the bank has been improving after its management came under the control of SBI, Sandeep Pandey of Emkay Global Financial Services said, “High risk investors can look at Yes Bank shares as it is going to emerge one of the biggest beneficiaries of the bad loan initiative taken by the Finance Ministry. They stock may go up to ₹60 per share levels in next four to five years, delivering at least 200 per cent return to the Yes Bank shareholders in this time.”
Stocks to buy today
On banking shares to buy today, Saurabh Jain, Vice President — Research at SMC Global Securities said, “In PSU banks, one can look at SBI, Canara Bank and Bank of Baroda whereas in private sector bank, my advice is to look at Axis Bank, ICICI Bank and HDFC Bank, if the perspective is for medium to long term.”
On stocks for retail investors who have limited amount for investing, Chandan Taparia of Motilal Oswal said that small retail investors can thing of buying IDFC First Bank and Bank of Baroda adn if their risk appetite is high, then Yes Bank can also be a good be
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On bank stocks to buy below ₹100, Manoj Dalmia, Founder & Director at Proficient Equities said, “Small retail investors an buy Punjab National Bank (PNB) and Bank of Maharashtra shares at current levels. PNB share price is expected to hit double digit in long term whereas Bank of Maharashtra share price may go up to ₹40 apiece in short to medium term, delivering over 30 per cent return to its shareholders.
