Bullish on 2 bank stocks: Siddhartha Khemka

“The next two-three months would be a transitory phase for the economy and we need to brace for higher volatility, need to stick to quality stocks and not to panic and exit,” says Siddhartha Khemka, Head of Retail Research, MOFSL.

What are you telling your clients? How can they brace for the fall?

It is a difficult time. Since the Fed event is over, there should have been some stability in the market and that is what the global markets indicated but alas domestic markets have taken a beating and a lot of that has to still do with what is happening globally with inflation and interest rates.

Back home, despite an outperforming or stable macro environment, the FIIs’ selling has continued to impact our markets. So the view goes out that the next two-three months would be a transitory phase for the economy and we need to brace for higher volatility, need to stick to quality stocks and not to panic and exit.

Stocks like

which are doing so well have got a deal in the EV space. If you see the domestic passenger EV market, they have 80% market share. Globally the market share has only gone up. From 2025, their new launches in Jaguar will all be electric and so that story does not go out of the books and continues.

But one does not look at those positives in this kind of market and people panic and exit. But one must have focus. If you are still convinced about your core story, you need to hold on to your stocks and see through this volatility as that should help in this environment.

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I don’t want to see these stories because


What is your take regarding the entire banking pack? How are you looking at it?

The quarterly results have been pretty good. Not only have they shown a sharp improvement in the asset quality, but after a very long time, the core business, the loan book growth, credit growth has also picked up. If one looks at the asset quality comparatively, it is one of the best in the last several years.

Despite that, because of the heavy FII holding, that sector has borne the brunt of the FII selling and hence a sector which is reporting good numbers but still not participated in the market.

We are constructively positive on select banking space. It is a mix of private and as well as PSUs. Our preferred banks are

in the private banking space and

which is in the PSU banking space. We believe that both of them have an edge over a lot of others in terms of both retail presence which gives them an edge in terms of the cost of funds as well as their presence in the corporate side which at least till now, has not seen a slowdown.

We have seen a whole host of newer companies announcing their capex and that might get a bit delayed but it is still definitely on the cards that the private capex cycle will see some kind of green shoots and pickup. Overall, we are constructive on the banking space with our preferred picks being ICICI Bank and SBI.

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Harry Byrne

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