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Are financial stocks dragging us into a bear market?Harsha Upadhyaya, Anand Shah and Gopal Agrawal, Equity Round Table, Mumbai

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Key Take-Aways
  • Some de-rating of financial sector warranted on account of high valuations as well as margin pressure. However, no structural damage seen to business fundamentals

  • Large proportion of index weight of financials is consumer oriented banks - which appear attractive due to this correction. NBFCs are too small in terms of index weight to drag market down

  • Among NBFCs, men are being separated from boys. Good NBFCs will get refinancing, some weaker companies can face challenges

  • Era of easy liquidity is behind us and margin compression in financial sector is for real. Peak valuations for financials are perhaps behind us

  • There are no signs right now of any structural issues for financial sector that can cause long term damage. For many stocks in this space, good buying opportunities now available.

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Comments Posted
Mukesh Gupta ARN NO :Wealthcare Securities Pvt ltd New Delhi, 08 Oct 2018

Very nicely articulated. I eagerly look for these discussions. Thanks Vijay.

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