Banking Stocks To Dominate Markets, Says Analyst

The Indian stock market, after a long weekend, extended its rally, led by financials, in the second half of Tuesday. The Bank Nifty, which has been underperforming for the last few months, is now trading close to the all-time high that it hit during the pre-election run-up. The index is up 4.73%, and analysts expect that it will take the lead and help move the Nifty index.

While the Nifty index moved by only 70–80 points, it is the banking index that is leading the market, said Aditya Agarwala, head of research and investments at Invest4edu. With Bank Nifty playing catch-up, he expects the index to retest its all-time high and cross the 51,000 mark.

"I think it's time for banking stocks to take leadership; from large-cap private sector banks to mid-cap banks, I think all of them will participate in the banking index. The banking index is where I think you should play if you are looking to go long," Agarwala told NDTV Profit.

He further stated that if he could trade an index, he would focus on the Nifty Bank rather than the Nifty index. Defence is another sector that has seen good gains over the last few months. But there is more scope for growth in the sector, said Agarwala.

Vinit Bolinjkar, Head of Research at Ventura Securities, concurs. He noted that the valuations appear somewhat inflated. Bolinjkar, however, said that looking at HAL's order book and the upcoming order, the company's valuation is quite low. Aditya also stated that he would buy on decline.

Bolinjkar said that fertiliser companies are a good pick when preparing for the upcoming budget. According to him, the inclusion of natural gas in the GST will benefit companies. He also said that the risk to the companies is close to negligible.

While Bolinjkar's picks include GSFC and FACT, Agarwala leans towards Deepak Fertilizers. According to him, the company has yet to see a move.

Auto ancillaries are another sector that both Agarwala and Bolinjkar are bullish about. The top choice for both is Samvardhana, which they say stands out and has a good buildup.

Disclaimer: The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.