In 2022, the domestic benchmark indices Nifty 50 and Sensex delivered moderate returns for Dalal Street investors, but the heavyweight sector likely to make up for this is banks.
The Nifty Bank index is up nearly 16% since the beginning of the year, reaching a lifetime high of 41840.15 points in September. However, Nifty50 and Sensex are up just over 1% over the same period.
Shares of most banks outperformed the market, with many of the frontline and mid-cap stocks delivering double-digit returns.
Within the pack, public sector banks outperformed their private sector competitors. While the Nifty Private Sector Bank Index has so far gained more than 17% in 2022, the Nifty PSU Bank is up more than 34%.
Despite the great gains, the sector remains a favorite and tops the recommendation list for most brokers.
One of the main reasons for bank stocks is their rising profits, especially in terms of asset quality.
The asset quality of both private and state-owned banks has improved significantly compared to the level of a few years ago.
In addition, a strong rebound in demand in the retail sector, such as housing, cars and unsecured loans, has fueled credit growth. Most banks reported double-digit loan portfolio growth in the September quarter.
According to Axis Securities, banking will be one of the key themes set to unfold in 2023, and it has
as one of his favorite choices.
“We believe the stock is poised for a revaluation given the bank’s continued asset quality improvement, its strategy to improve operating performance with expected operating leverage and superior return ratios over FY23-25E,” it said in a statement. report.
The brokerage target price for the stock is Rs 70 which represents a 24% increase from its current level.
Brokerage Kotak Securities sees banks and financial institutions as one of the main contributors to Nifty 50 revenue growth in FY23 and FY24.
Within the mid-cap space, the other stock that has sparked interest is:
. Angel One, Axis Securities and have listed this stock as their Diwali pick. They see 15-40% for the stock from its current level.
Among the large-cap banks,
, and are the preferred stocks for analysts.
(Disclaimer: Recommendations, suggestions, views and opinions of the experts are their own. They do not represent the views of Economic Times)