Banking, Consumer and Healthcare Lead to Market Gains: Shibani Sircar Kurian
Banking sector: Attractive valuations, larger PSU banks better placed
“When you were talking about PSU banks, let me take a step back and maybe discuss what is happening in the overall banking sector and then move on to the PSU banking package,Kurian began.
She said the broader banking space had faced many headwinds – lower loan growth and pressure on margins – but both were now showing signs of easing. “In terms of credit, we may be nearing the end, and so we’re starting to see some upside in terms of credit growth… and recent management commentary seems to indicate that, particularly in retail.“
He believes that margin pressures are likely to subside given that rate cuts have not yet started and that from now on Profit growth will be led by core banking operations.
“Our preference was private banks. However, there are specific picks within the PSU banks where some of the larger PSU banks are better positioned to benefit from both the acceleration in loan growth, particularly on the retail front, and margins bottoming out… The sector in terms of valuation is attractive especially relative to history regardless of short-term movement,” she added.
NBFCs: Play with specific stocks to avoid stress
While banks remain its preferred segment, Kurian sees select opportunities within NBFCs. “Our preference within the overall banking space or the overall financial services space is slightly tilted towards banks. Within NBFCs, we have been quite specific to equities and have looked at NBFCs where there has been strong growth and asset quality is a clear differentiator,She noticed that while the unsecured and microfinance segments are showing signs of bottoming outThe SME segment will need to be closely monitored. “Within the NBFC pack, valuations are not as attractive as banks, hence we have been selective about NBFCs.” she emphasized.
The consumption story: Discretionary demand is coming back
Kurian was also bullish, especially on the topic of consumption discretionary spending. “There have been a bunch of policy measures from the fiscal side, starting with the tax cuts that happened during the Budget, followed by the rationalization of GST, as well as monetary pressure due to the 100 basis point rate cut… Overall, our consumption outlook is positive,she said.
Within consumption, its focus remains on carsespecially entry-level two-wheelers and four-wheelers. “The figures coming in this holiday season seem to confirm that there is indeed some demand… one of our preferred picks was the automotive space,” she added.
Consumer durables: Weather impact behind, gradual recovery ahead
On the sustainable consumer front, Kurian expects gradual recovery after monsoon disturbances. “Some parts of the durables segment have obviously been affected due to weather patterns…it is also a segment that is benefiting due to policy changes. Within the consumer durables package, the smaller consumer durables ticket segment appears to have gained momentum faster,” she explained.
She believes the entire discretionary basketwhich includes retail and quick trade, is poised for steady recovery in the coming quarters.
Earnings outlook and sector preferences
Looking at the broader market earnings trajectory, Kurian expects an improvement by FY27.”While current earnings estimates for the quarter are muted… by FY27, Nifty earnings are likely to pick up and we see some sort of earnings trajectory in the mid-teens,she said.
Her best sector bets: banking, consumer and healthcare. “Apart from banks and consumer which are our two main sectors, another segment we are bullish on is healthcare as a space, specifically hospitals… we believe the return profile of the sector remains strong and valuations are still reasonable,Kurian said.
IT: Wait and watch, but long-term potential intact
On IT, Kurian called it “something like a counter call so far.She pointed out that while near-term growth may remain subdued due to seasonal factors and global demand uncertainty, The adoption of artificial intelligence could become a long-term stumbling block.
“There is a lot of debate about whether AI will take away from the growth of the IT services suite… but as businesses embrace AI more and more, India’s IT services segment stands to benefit.” she noted and added strong agreement wins provide comfort.
Pharma: Home games and hospitals hold promise
In the field of pharmacy, Kurian emphasized a different outlook across sub-segments. “The domestic pharmaceutical product continues to show steady growth…we have been focusing on the domestic pharmaceutical product within the pharmaceutical package, some opportunities are also coming in the CDMO segment given what is happening in the world,she said.
He remains positive HOSPITAL, homemade formulationand CDMO playswhile also recommending caution in US generics due to pricing and tariff uncertainty.