Bank of India MF CIO Alok Singh sees banks poised for a re-rating. Here’s what could trigger it
Bank of India Mutual Fund CIO Alok Singh sees scope for banks to re-rate as low NPAs, healthy returns and loan growth support fundamentals. He expects policy announcements and stronger business numbers to ease concerns around NIMs and FCNR flows, while capital goods, banking and metals could deliver stronger earnings momentum.
Indian banks may be closer to a re-rating than recent performance indicates, according to Bank of India Mutual Fund CIO Alok Singh. While lenders have strong fundamentals, concerns over net interest margins and liquidity flows have held the trade back. Singh believes the disconnect between valuations and performance could persist indefinitely if trends continue.
Public and private sector banks are fairly valued and have become more affordable since last quarter, even as their businesses remain robust. Singh cautions against over-reliance on benchmark indices, emphasizing the importance of stock-picking, especially in the large universe of small-cap stocks. With the economy normalizing post-COVID, bottom-up stock selection becomes crucial.
Singh's portfolio primarily focuses on small and mid-cap stocks, with a minimal allocation to large-cap companies. He believes that the market is currently fairly valued, so future gains will likely be driven by earnings.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
