The concerns around the banking sector could slow down earnings for the BFSI segment says Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services. Agrawal pointed out that banks are seeing a deposit flight in low-cost savings accounts because people now prefer to deploy that money in stock markets. This reduces the mix of the deposits and raises deposit cost liability for the bank, putting NIM under pressure.
Agrawal pointed out that the saving grace for the banks is the loan demand, which is witnessing a strong demand. “If loan grows at 18-20 percent and the system growth is 15 percent, then you can grow at 20-25 percent in terms of volume and that gives you operating leverage. This combination of volume and operating leverage cushions the pressure on NIM and hence the profitability could be saved”, he added.
However, he also said the market needs to watch how bad the deposit flight will be in the coming quarter.
Commenting on the results so far, Agrawal said the overall earnings aggregate looks tepid because the demand is weak. He says to watch out for the upcoming earnings of automobiles, defence and capital goods to get a full picture of the earrings aggregate.
Speaking on Ayodhya, Agrawal says the city could have daily flights charted from metro cities and other parts of the country, which would lead to a boom in the aviation sector and the overall economy of Ayodhya.
Agrawal also said that the government will push out for more divestments as valuations in the equity markets are at the highest and divestment is necessary to cool the markets down and bring sanity to the proceedings.
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