Market Strategy: Will NBFCs and banks lead the next Indian market rally? Hemang Jani answers

“One is that companies that have high growth or where people have more confidence in growth, even though the valuations may be higher, I think those stories will still be engaged,” he says. Breathe JaniIndependent market expert.

Now that the Reduction of rates The cycle has officially started, what do you think are the sectors that are best positioned in India, because in the last few cycles we have seen NBFC (non-financial financial institutions) We had done very well in the beginning. Do you think that this time too we will follow suit and be in a favourable position as far as NBFCs are concerned?
How to breathe: So, what we are clearly seeing is that a lot of this rate cut was already known and pretty much priced in both in India and the US, and that is what was seen as a reaction. Now, coming to the point of what are the sectors where we would be in a favorable position. So, clearly across the market, there are two things that are happening. One is that companies that have high growth or where people have more confidence in growth, even though the valuations may be higher, I think those stories will continue to play out.

Something like a story of retail, of exchange. capital market Related stories, two-wheelers, airlines. So, I think that theme remains the same as it was before this rate cut. But as part of the sector rotation, we saw banks and NBFCs in action. In fact, NBFCs were in action even before that. So, I think we may see more upside as far as banks are concerned, maybe some of the metal companies. So, as part of the rotation, we will see both these themes play out well.

One cannot ignore the kind of movement we witnessed yesterday in the IT sector, whether in large companies or in mid-market companies, in general, where selling pressure was evident. What is this a sign of? Do you think there are lucrative buying ideas within this sector as well?
How to breathe: Yes, I think it was just a kind of profit-taking or maybe a kind of sector rotation. I don’t think there’s anything negative going on in incremental terms.

In fact, both quarterly numbers show that some companies are showing a recovery in some of the vertical sectors. People have a more positive view of the sector. And within this space, we like something like HCL TechnologyWe like it LTIM mental treewhich actually sounded very positive in terms of the future growth outlook. Some of the mid-caps we also like, something like Talcwhich has not performed well compared to other mid-caps. Therefore, we have a positive outlook on some of these names.

Do you think the next leg of the rally is going to be led by banks? That rotation is already underway. It is a global rally that we are a part of and purely because of the weighting that the Bank Nifty has, that is also going to drive the markets higher in any case inevitably.
How to breathe: I think we have seen massive underperformance for almost two years by the Bank Nifty and the bank shares And within the entire sector, there are NBFCs, insurance and capital markets. So, there is a different interaction between the capital market or insurance and NBFCs as compared to pure banking.
And I think given the marked underperformance that we’ve seen, there’s a case to be made for some sort of outperformance, and even more so because overall the results have been good and this whole issue of banks not being able to increase deposits, I think over a period of, say, the next three months or so, we’ll see some improvement there.

So, I think it makes sense to go with something like… ICICI Bank, State bank, Axis Bank at this point due to the comfort of the valuation versus the general market.

So, you’re saying not to go with people like… ICICI BankKotak Mahindra Bank etc. at this time?
How to breathe: I say it makes sense to go with these names because they have actually delivered on quarterly numbers and the valuation comfort is much higher compared to many other segments of the market.

Talking a little more about the electrical sector because PCNT As we have noted, it will focus on a kind of DRHP, Power grid It is focused on order acquisition, IREDA, where QIP has also been approved. What, within your possibilities, would you recommend buying?
How to breathe: So, I think all of this… renewable energyThe green energy story is at a very early stage of the whole growth phase that one is really looking at and while this stock has gone up quite a bit for something like an NTPC, if you see the subsidiary filling the DRHP and if there is a subsequent listing, we have seen what kind of response IPOs are getting these days. So, there will be a certain amount of excitement because of that.
Tata Power Because of the type of solar modules they’ve gotten into and the overall growth prospects that one is really looking at, this could become a very important story in the next two to three years.

But yes, what I would like to say is that when it comes to renewables, green energy, you need to have a certain amount of allocation. You don’t have to go all in and try to get into whatever is there and generates excitement. So you have to be a little bit more careful, but the overall story looks quite promising.