Don't paint them with the same brush: 18 financial services stocks from different segments with more than

While they all come under the broad umbrella of financial services, they are so diverse that each segment is an industry in itself which is governed by an operating matrix that is very different from another. For example, a Housing finance company can be happy with 10 percent net margins, but for an average asset management company ( AMC) the net margin would be more than 30 percent. The only common thing that binds the financial service sector is the GDP growth rate as the growth in all segments has a certain well-defined relationship with GDP growth.

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.

A software company with a net margin of 10 percent is probably not worth looking at but if an infrastructure and construction company has a net margin of 10 percent it is not bad at all. The best construction player in India strives to get double digit numbers, but it has been able to create wealth for its stakeholder. Every industry has its own matrix which should be taken into account before investing. ET screener powered by Refinitiv’s Stock Report Plus lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy .

There have not been many instances where one would have seen PSU banks strongly out performing the private banks. But we have seen a divergence in recent times. This probably is a reflection that finally the street has realized that it is wrong to paint all the companies in the banking sector with the same brush. It is even more true for the other parts of the financial service sector with the same brush. While they come under the umbrella of the BFSI, the operating matrix of each segment of financial service is very different and hence it is extremely important to have a look at segments with different lenses. The only common thing which binds the financial service sector is the GDP growth rate as the growth in all segments have a certain well defined relationship with growth in GDP.

In the last many months when IT stocks came under pressure it was financial service stocks including banks which have been able to help the nifty recover. In fact after auto it has been the financial services stocks which has led to nifty touch new highs. On days when global markets are under pressure and the nifty is showing signs of out performance. A number of times this up move is led by financial service and bank stocks. We take a look at what analysts are saying for select financial service stocks.

After a minor correction, markets are once again on roll. This time the upward movement has been led by IT stock. When it comes to nifty and sensex, it is dominated by IT and financial services. So as the financial services stocks take a breather, a sectoral turn is taking place and the nifty is moving upward. Now because IT stocks have come into focus after a gap of two years, it needs to be watched how much they are able to push the market. While the party continues on the street, it would be better for investors to focus on what is happening to the individual stocks they own and how the operating matrix of that sector is shaping up. These selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame.

Sustained sectoral growth, accounting for around 60% of overall output, indicates India's economy will continue to outpace many of its major peers over the coming quarters.

Financial sectors stocks tend to do well, where there is inflow from foreign portfolio investors, the reason, it is their preferred sector for taking exposure to the Indian market for decades as it can also act as a proxy for GDP growth. After a gap of two months, September and October, FPI have been net buyers in the month of November and till date in December. Given the fact that in the last one year there has been a sort of underperformance by financials stocks, there is high probability that we might see some of them making a come back, we take a look at stocks from this sector where one of one of valuation matrix meets the criteria for investing for long term.

While the recent performance of stocks like REC, PFC and recently listed IRDEA has brought focus back to one segment of power companies. But the fact is that in the last few years, the sector has been going through a consolidation. Some of it was forced by the banks due to many companies going under the IBC and some due to the fact that any industry which has gone through a troubled phase of almost a decade, the players who are able to survive tend to get more attention because they have learnt the art of surviving a tough phase which is one most important feature for long term survival. Power sector stocks are now catching up with what the market has witnessed in the last few years.

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.