Banks are expected to report strong quarterly results in the medium to long term due to the Government of India’s decisions to deal with bad loans and NPAs. At the same time, PSU banks are expected to be at par with private banks in banking business.
How will banks fare this year?
According to a report by Mint, stock market experts said the fall in the dollar index has made foreign borrowing costlier for large corporates and hence such corporates are turning to the Indian banking system for lines of credit. This is helping PSU banking stocks in the medium to long term. Hence, banks like Axis Bank, ICICI Bank, HDFC Bank and IDFC First Bank are expected to benefit from such emerging business models in India.
Also, for retail investors who want to take advantage of the opportunities available in the banking sector but have limited investment funds, experts are advising them to buy shares of mid-sized PSUs and private banks. This includes shares of Yes Bank, PNB, EDFC First Bank, Bank of Baroda etc.
Which stocks will give strong returns
Chandan Taparia of Motilal Oswal said investors are expected to keep an eye on Axis Bank, ICICI Bank, HDFC Bank and IDFC First Bank. Sandeep Pandey of MK Global Financial Services also advises high risk traders to invest in Yes Bank saying, “High risk investors can keep an eye on Yes Bank shares as it is bullish. In the next four to five years, this share will be Rs. 60 per share level, in which case shareholders can get at least 200 per cent return.”
On the other hand, on buying bank stocks below Rs 100, Manoj Dalmia, founder and director, Praveen Equities, said, “Small retail investors can buy shares of Punjab National Bank and Bank of Maharashtra at current levels. PNB share price is expected to move to double digit levels in the long term, while Bank of Maharashtra share price is expected to rise to Rs. can go up to 40, which will give their shareholders a return of over 30 per cent.”