Key Points
We are identifying companies with an acceleration of earnings growth and to our good surprise after many, many years, it has all been the PSU stocks which have run up..
Both power financing companies as well as power utilities are both good in our opinion, both for the short term as well as the long term, simply because India is a services economy..
Indeed, there has been an increase in risk weighting and so that will very clearly bring down the loan growth rates and all these companies have been, their whole premise has been that they will grow fast, acquire customers fast, etc, and that will transition lower..
But banking does better simply because if that interest rate cut does indeed happen, which is good for IT, it is even better for the banking index because all the consumer spend which has been weak, private capex which has been weak, will start to pick up and aid economic growth...
Indeed, as we were just discussing, basically, the unsecured lending has become an RBI focus and therefore some of the loan growth rates will kind of taper down for sure and now they will have to do a certain amount of cherry picking within their customer base to reinvent the quality of the book so that it does not become an NPA in the future..
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