Bank stocks remain JP Morgan’s preferred pick in India, due to strong earnings potential

NSE Bank Nifty index has gained 12 percent in the last six months and 4 percent since January 1. (representative image)

Banking stocks in India remain the preferred pick for JP Morgan on expectation of strong earnings growth in the sector, said Sanjay Mookim, JP Morgan’s Head of Research. “In terms of combination of growth and value, banks look good in India,” said Mookimin in a panel interview with CNBC TV18.

Earlier this month, IDBI Capital said that it expects bank credit growth to remain in a range of 12-14 percent. “This would be led by higher retail credit growth, coupled with revival of corporate credit,” said IDBI Capital in a report dated September 1.

Also read: Be careful of mid and small PSU banks, says Ajay Bagga

The firm also expects housing sector credit to witness positive growth traction led by pausing of repo rate by the central bank, as well as strong focus of the government-led affordable housing scheme.

NSE Bank Nifty index has gained 12 percent in the last six months and 4 percent since January 1.

Mookim said that JP Morgan would carefully allocate the money in the midcap space. The Nifty midcap index has rallied over 30 percent in the last six months. While some experts believe that there is still potential in midcap stocks, some believe to stay cautious over the same.

Also read: Caution advised in Smallcap and Midcap Sectors midst market exuberance: Interview Axis Securities CIO

A few experts believe that the midcap segment presents challenges, as both midcaps and smallcaps appear to be overvalued, except for specific stocks, where caution is warranted.

Mookim also believes that there is more steam left in defence and power stocks.

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