There is more to BFSI than just banks: Financial services stocks with “Buy” rating which may deliver 12-30

There are some sectors where the macro structure is such that for one or the other reasons the overall growth is higher. This is not to say that growth comes without phases of slowdown, but when tailwinds come they are able to take care of all the slowdown and over a period of time, growth is much better. So, at times valuations are high, take exposure to stocks and sectors where at least there is high probability of growth ensuring that over a period of time, valuations get normalized. When we talk of market size it is not only India but in some cases global markets also. Second, look at business that is bound to grow as markets expand and every transaction brings in some money to the topline and industry structure is such that cost does not grow in the same proportion leading to higher and stable margins.

After a relentless rally for the last ten months, the mid-caps segment of the market is witnessing some profit booking/ correction/ rational shifting/ consolidation. Why slash ? Because, the way stocks are moving, there is no one trend in mid-cap space. Some are coming down just because they have moved very fast, some of the stocks where are literally hardly any fundamental, like the ones where the companies are under IBC and still quoting at half a billion dollars market cap. So there are many sub segments which are getting formed in mid-cap space and given the mix of head and tailwinds, this segmentation is likely to see an increase. So, one will have to do two things, one be bullish but be more selective and focus on managing risks.

Whether it is upward or southward movement of Nifty or Sensex, it is largely led by financial services stocks which include banks, both private and public sector and other heavy weights which essentially are part of the financial services. The reason, high ownership of foreign portfolio investors ( FPI ) in the majority of financial services and banking stocks. The big difference this time has been the fact that while private banks are correcting, PSU banks have been able to outperform and have provided a counter to bears. If the PSU banks start to correct, will it lead to correction in overall markets ?

With the focus of government policies increasingly turning favourable toward the manufacturing sector, some of the capital goods and engineering companies are making a comeback on the analysts list.

While the bank nifty might be facing pressure in today’s trading session, it is because of the three private banks with high weightage in the indices witnessing selling pressure.For contrarian and short term traders there might be an opportunity given the fact that it has been witnessed that such moves are followed by short covering sooner or later. But again this probably is trade for high risk traders or investors who have the ability to take a stand against market narrative. Check out Stock Reports Plus, powered by Refinitiv, for price targets of over 4,000 listed stocks along with detailed company analysis focusing on five key components - earnings, fundamentals, relative valuation, risk and price momentum to generate standardized scores. SR+ Reports is a complimentary offering to ETPrime members.

Private general insurers increased their combined market share to 53.58% in gross direct premium underwritten in the first half of the current financial year from 50.81% in the year-ago period

One segment of the market which got another big push in the market after the election results have come has been the mid-cap segment. Both at the index land and breadth level mid-cap which were already out-performing got a push. While there is nothing wrong in being bullish given the fact that policy continuity is the next theme on the street. However, keep some check and balance while participating in this phase of the rally. The reason is the valuations are not cheap and any small profit booking correction may lead to sharp correction in individual stock prices. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

However if one looks at the history of financial markets, there are phases where multiple challenges have come up for the sector at the sametime. But given the savings matrix which Indian’s have, despite all that may have happened, on an overall basis the financial services industry has grown and some select stocks have given decent returns to their shareholders.

On days when global markets are under pressure, nifty is showing signs of out performance. After opening lower, it is able to inch upward and market breadth also improves gradually. A number of times this up move is led by financial service and bank stocks which are announcing their Q4 result. We take a look at what analysts are saying for select financial service stocks.