Money managers on Dalal Street continued to shower affection on private banks for the ninth successive month as their exposure hit 19.90 per cent in June, up 370 basis points YoY and 20 basis points QoQ.
There are hopes that large private corporate banks with adequate provisioning and fewer concerns over incremental slippages from select leveraged accounts could see a sharp improvement in return on assets going forward.
Even in a tumultuous month for the equity market, mutual funds further increased exposure to the NBFC space by 10 basis points to 9.20 per cent. It was followed by technology (up 10 basis points to 8.70 per cent) and consumers (up 20 basis points to 7.60 per cent).
“Earnings growth has not been very impressive over the past few years. However, there are select quality companies – mostly among private banks, insurance, technology, energy, industrials, consumer, and media – which show potential,” Sanjay Singh, Head of Global Markets, BNP Paribas India, told ETMarkets.com.
June was a highly volatile month for the market, with Nifty surpassing the 12,000-mark to hit a record high at the beginning of the month. But the euphoria over the general election outcome fizzled out as investors woke up to ground realities, including a slowdown in the economy, concerns over liquidity woes for NBFCs, and a moderation in consumption, among others.
Throughout the month, Nifty consolidated in the 11,500-12,000 range, in keeping with the volatile trend of the past two months. Nifty Private Bank index declined 1.86 per cent, while Nifty50 lost 1.12 per cent.
Reliance Securities continues to prefer corporate banks, including ICICI Bank and SBI, with a strong liability franchise, fewer concerns over incremental slippages from corporate accounts and those that have adequate provisioning and are trading at inexpensive valuations.
“Given a not-so-benign operating environment, conservative plays like HDFC Bank and Kotak Mahindra Bank should continue to do well, even though they are trading at expensive valuation multiples,” the brokerage said.
In the Nifty50 pack, mutual funds were net buyers of around 62 per cent of stocks, with Tech Mahindra, JSW Steel, Bharti Infra, Hero Moto and IndusInd Bank being their top picks. (See table).
On the otherRead More – Source
[contf] [contfnew] 
ET Markets
[contfnewc] [contfnewc]
