BFSI Outlook: BFSI stocks are likely to see strong inflows once foreign institutional investors (FIIs) return to Indian equities, while Indian banks still have enough headroom to grow, according to Rahul Arora, CEO of Ashika Institutional Equities.
Arora told NDTV Profit that banking is currently suffering collateral damage from the artificial intelligence (AI) trade, even as bank credit growth has grown by 15-20% every month. He also does not expect banks' asset quality to deteriorate.
BFSI May Witness High Inflows Once FIIs Return
Arora said BFSI could see high inflows once FIIs return to the Indian market.
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He added that Indian banks still have enough headroom to grow and does not expect asset quality in the sector to deteriorate.
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Bank credit growth has grown by 15-20% every month, according to Arora.
Banking Faces AI Trade Collateral Damage
Arora said the banking sector is suffering from collateral damage caused by the AI trade.
At the same time, he expects the RBI could raise rates by up to 75 basis points in the near future.
Packaged Foods Companies Likely To Perform Better
Within the consumer space, Arora expects packaged foods companies to perform better.
However, he noted that price sensitivity in packaged foods is relatively high.
He also said the market is more positive on consumer discretionary companies, while elections are expected to boost momentum in the consumer space.
Arora further said he would stay away from insurance and hospital stocks.
He pointed to valuations in some consumer-facing companies, saying Asian Paints and Trent are “priced to perfection.”
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