PSU Banks Stocks Could Beat Nifty in Next 3-6 Months
What is behind the resilience of the market? Even shallow hollows are accepted.
There is all this preponderance of liquidity in the market. Previously, we saw an increase in the liquidity of the IFIs. We are now seeing that a surge in liquidity is also coming from domestic investors on a sustained basis. If we look at corporate earnings, the resilience is clearly visible. Therefore, the dips will be purchased.
What’s a good buy on dips now? The Nifty Metal Index is down 10% from its recent peak. Can Metal Stock be such a buy now?
I think we continue to remain bullish across the entire commodities game. We continue to believe that capacity uses are increasing and prices are increasing. An increase in volumes would be beneficial for most raw material inventories.
How do you see Jubilant Pharma?
Jubilant Pharma is not on our radar. The ranking is not yet clear. I think it is better to focus on the big pharmaceutical companies.
How do you see the overall basket of PSUs given the trigger for privatization?
PSU banks have been a ranked underperformance for several years now. They struggled with capital because the NPA ratios were very high for most of them. Fortunately, the provision coverage ratio is over 90% this time around for many banks right now. With such high provision coverage ratios and with a CAR ratio now around 14-15%, many PSU banks look pretty strong from a balance sheet perspective. The worst NPA is now over. With the pandemic recovery, banks should be able to switch to recovery mode fairly quickly. We have witnessed this in the big PSU banks. Smaller power supplies are catching up. Thus, for the next 3 to 6 months, PSU banks would be better off relative to the market.