Higher interest rate regime to benefit banking stocks, says Santosh Pandey of Nuvama
Higher interest rates should help prevent NIM contraction, and higher inflation could drive credit growth by an additional 100-150 bps, says Santosh Pandey, President & Head at Nuvama Professional Clients Group. Banks are currently trading at reasonable valuations, Pandey said as he opines that higher interest rates could benefit banking stocks, assuming no major surprises in asset quality.
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Following the Adani bribery saga, markets smartly recovered on Friday and rallied on Monday riding on the BJP-led alliance's victory. The domestic markets once again proved that no matter how bad the news is, the rebound will be with a much greater force. But the trade has been range bound this month which suggests consolidation. Do you see a clear trend over the next 2-3 months?
The market was in an oversold zone prior to Friday and positive news such as the Maharashtra election exit polls, triggered short covering. While Monday's gap-up opening reflected this momentum, we believe that substantial market movement will only occur with either a return of FII inflows or a positive earnings surprise. Given the December holiday impact on FII activity and the awaited clarity post-3Q FY25 results, we expect the market to consolidate over the next 2–3 months before a major move unfolds.
Nearly Rs 1.06 lakh crore FPI money has left Indian shores in less than 2 months — first it was 'Sell India buy China' and now it is 'Sell India buy US' clamour. One of the reasons is that valuations are still high despite a 9-10% correction.
