The success of a few key sectors will be crucial in guaranteeing a prolonged rising trajectory even though other sectors are assisting the momentum.
Once the NSE Nifty 50 finally crossed the 20,000 threshold, investors and experts are now turning to banking stocks to maintain the gains and drive the benchmark higher, supported by a few other scrips.
Analysts’ attention appears to have been drawn to companies in the banking industry, but not to IT firms. On the Nifty 50 index as of September 11, banking companies had the most “buy” calls, while IT stocks had the most “sell” calls, according to Bloomberg data.
State Bank of India (SBI), which has 47 “buy” calls on its stock, leads the list. With 45 ‘buy’ ratings each, HDFC Bank, ICICI Bank, and Axis Bank follow SBI in order.
According to Ajit Mishra, SVP Technical Research at Religare Broking, “Although all the sectors are contributing to the move, we consider the performance of banking would play a significant part in making a sustained up move from hereon.”
Using the Expansion of the credit:
According to a study from IDBI Capital dated September 11, the banking credit growth surged to 15.4 percent in FY23 from 9.7 percent in FY22. According to the brokerage firm, future credit growth will be between 12 and 14 percent, driven by increased retail credit growth and a recovery in corporate credit.
Due to the repo rate halt and the emphasis on the affordable housing program, IDBI Capital also anticipates favorable growth in the housing sector lending.
On the other hand, analysts continue to be wary about IT equities, primarily because of their high valuations. The most “sell” calls in the group are made by Wipro (18). Tech Mahindra, with 16 “sell”
calls, and LTI Mindtree, with 11 “sell” calls, are the next two IT stocks in the Nifty 50 after Wipro. There are 10 calls to sell Tata Consultancy Services stock.
In light of the difficult macroeconomic climate, Infosys reduced its revenue growth forecast for the current fiscal year from 4 to 7 percent to 1 to 3.5 percent. Due to clients’ continued caution and
the lack of an increase in discretionary IT spending, TCS and Infosys emphasized after the Q1FY24 earnings that there was no sign of an on-demand recovery.
“Our talks indicate that the demand situation has only slightly improved. Since investing in Nifty IT at these prices over the previous 15 years has resulted in underperformance compared to Nifty, we
think that the 33 percent premium that Nifty IT commands over Nifty is excessive. We therefore continue to be wary about the industry, according to Jefferies in a research from September 7.
The ability of other stocks to change the needle:
In addition to the financial stocks, Larsen & Toubro, Mahindra & Mahindra, and Maruti Suzuki are among the other companies that analysts are optimistic about. As of September 11, there are 38 ‘buy’ recommendations for each of the three stocks.
The highest number of “sell” calls, excluding IT stocks, are placed on Asian Paints and JSW Steel. There are 15 sell suggestions for Asian Paints and 14 for JSW Steel.
Increased demand, better profit margins, a positive product cycle for different companies, and these factors are all contributing to the Nifty Auto Index’s revival. In a research published on
September 7 by Jefferies, the company claimed that as a result, the Nifty Auto Index outperformed the larger Nifty-50 Index by a significant 33 percent from 2022 to 2023. According to Jefferies,
over the FY 2023–26, earnings for the auto industry are projected to grow by a double-digit CAGR.
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