ICT | Reliance |HDFC Bank: After Reliance & ITC, is it HDFC Bank’s turn to outperform? Sandip Sabharwal responds | Techno Glob

“In my opinion, if the merger with had not been announced, could have been Rs 1800 more. This merger is not in favor of retail minority investors, it is not for them. It is a merger of convenience and that’s what’s leading to these moderate price moves. We need to look at what flexibility, if any, RBI gives to the merger in terms of SLR, CRR requirements, etc.” Sandip Sabharwalasksandipsabharwal.com

The banking sector is in a kind of bull run and there is a structural recovery, but or rather its microfinance activity is in trouble. Sampada has been struggling, whose business is ex-Bharat Finance is not stable.
I think at the bottom end there are obviously issues because borrowers are being hit by high inflation and slower demand, especially in unorganized or semi-organized businesses, and that’s reflected in all these results. These lenders will have a harder time moving forward considering that their deposit allowance is much lower than that of the big banks and in a rising interest rate scenario this hits them much harder.

People should therefore remain focused on the larger banks, if at all, and they should invest in financials and not try to do value selection on stocks that have fallen too much, because that could be a value trap.

Not everything in the PSU banking space looks solid and not everything in the PSU banking space will work, but the markets right now don’t differentiate good from bad and bad from great, it’s is a rising tide phenomenon that started with and now names like , even all of them are jumping on the bandwagon?
It’s true and it’s also seeing that it’s a familiarity bias for many retail investors because they tend to bank those banks then they think SBI is at Rs 570 those banks are at Rs 30, Rs 40 or Rs 100 and that belief comes in that they should go up.

Also earnings delivery has obviously been decent in the short term due to NPAs being reduced and huge covid time losses coming out in profits but then I think people need to take a direction as to where they see these banks doing in terms of their deposit deductible and in the sustainability of earnings growth, so I would largely steer clear of anything other than SBI.

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Each time a stock is booed on social media over the next six to eight months, it appears as the top performer. The same thing happened with then it was then it was SBI. So just looking at trends, which we look at in social media trend analysis, could HDFC Bank be next?

Sandip Sabharwal: The only difference between all these stocks and HDFC Bank is that all these stocks also had skeptics. There were people who were believers and there were also people who were non-believers. We have so-called social media comments from both sides. In HDFC Bank there are only bulls. So we have to see if this trend will follow.

In my opinion, if the merger with HDFC had not been announced, HDFC could have been Rs 1800 more. This merger is not in favor of minority individual investors, it is not for them. It is a merger of convenience and is what leads to these moderate price movements. We need to consider what flexibility if any RBI gives to the merger in terms of SLRs, CRR requirements, etc. and this will determine how the stock will perform. I think these are very important fundamental factors that we have to pay attention to.

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