“Banking clearly, the private banks is far more structural story. I mean, they can continue to grow at a pace higher than the industry and the GDP over a longer period of time,” said Karthikraj Lakshmanan from UTI AMC in an interview to ET Now.
He added that while overall credit growth has dipped into single digits, the recent slew of rate cuts, direct and indirect tax reductions, and liquidity infusion should fuel growth in the near term. “Probably anyways for the banks the second half is the busier season. So, in the second half we should start to see some improvement in the growth, but we would look at the longer-term growth prospects and that for private banks clearly looks good.”
On the debate between private and public sector banks, Lakshmanan noted, “From a structural perspective clearly, the private banks can continue to grow much faster than the industry while the public sector banks, select few public sector banks, may be in line and few of them could be even lower. But at this point in time as you rightly highlighted even the public sector banks do not have any asset quality issues and the return ratios are quite comforting.”
He highlighted consumption plays as a key beneficiary of recent GST rationalization. “The GST cut is definitely a positive for the consumption space as a whole. While the cuts may be even for FMCG and durables discretionary, one would believe that the lot of savings would eventually move to some of the discretionary items. It could be durables, it could be autos.”
Metals, too, are catching investor attention. “The ferrous metals continue to have good volume growth domestically and that is positive and overall, probably the valuations are still not too expensive considering that the balance sheets are far stronger today than in the previous cycles,” Lakshmanan said.Looking ahead to IT stocks and the IPO wave, he expressed cautious optimism. “The valuations have come down to very attractive levels and probably pre-COVID levels… eventually what matters is the earnings growth and that we believe should start to improve in next few quarters.”On macro factors, Lakshmanan remains constructive: “We are not seeing too much of a pressure even now. The consumption boost is what is expected to kind of deliver higher tax returns. Eventually, we would hope that the private sector capex starts to pick up.”
With multiple sectors showing structural strength and policy support in play, investors are eyeing both near-term gains and sustainable long-term growth.
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