Banking Top Sectoral Bet Of Jefferies' Mahesh Nandurkar — Here's Why

The Reserve Bank of India's fresh measures to boost liquidity makes banking, financial services and insurance a top sector to bet on, according to Mahesh Nandurkar, head of research and managing director at Jefferies India.

The BFSI sector is also supported by attractive valuations at which sectoral stocks are currently trading at, Nandurkar pointed out, in an interaction with NDTV Profit on Monday.

There have been fresh additions to 'buy' from Jefferies in the BFSI sector with the likes of HDFC Bank Ltd. and Bajaj Finance Ltd. added to the list.

"In my view, banks and other lenders, including the NBFCs, look like the best sector to own from the risk-reward perspective, from both a short-term perspective and a 12-month perspective. Valuations are very reasonable, below historical average," Nandurkar said.

The top Jefferies India analyst, however, noted that the growth in the sector has been a bit of a disappointment with credit growth slipping. Both, the credit and deposit growth have bottomed out, he added.

But, with the RBI announcing more liquidity infusion, the growth "should be improving", he said. This, along with attractive valuations, makes the BFSI sector "my top sector pick today", he further said.

Nandurkar sounded bullish about the hospitality segment, while talking about other sectors that could see growth in the period ahead.

"We do like travel, tourism and hospitality as a space. We are also expecting some positive surprises in the March quarter," he said. The positive outlook is based on some of the indicators that the brokerage is tracking, he added.

Metal stocks may see a phase of growth with the recovery in China, which is attracting a significant share of the foreign investment in non-US markets, Nandurkar suggested.

"Metals have a good chance of doing well. For investors looking to play the China recovery story with an Indian portfolio, metals could be a good way to play that," he said. Also, the sectoral stocks have a reasonable valuation which is "not very expensive", he added.