Expect a rally in PSU bank stocks in next few days: Vinit Bolinjkar

Expect a rally in PSU bank stocks in next few days: Vinit Bolinjkar

"Many banks are also looking to raise funds to comply with regulations to bring their stake below 75%. Hence, I foresee a notable rally in PSU banks contributing to a higher Bank Nifty in the coming four to five days," says Vinit Bolinjkar, Ventura Securities.

Throughout this week, banks were the clear standout gainers, especially the private sector banks. They are currently trading near their five-year averages despite the better return on assets (ROAs) and loan book growth compared to public sector banks (PSUs). What do you make of this? Also, considering the rollover figures for Bank Nifty, are private banks poised for higher levels from here on, with PSU banks potentially participating as well, especially as we enter a month when earnings kick off?Vinit Bolinjkar: So, I believe this month could be very promising for the markets due to upcoming results from the first quarter of the new year, which are expected to be strong, building on the robust numbers seen last quarter across corporates. Given today's market dynamics, I anticipate some sideways movement in the next few days around the psychological barrier of 24,000. Before a potential rally resumes, I see a good buying opportunity in PSU banks, poised to bounce back strongly on the back of anticipated strong earnings. Many banks are also looking to raise funds to comply with regulations to bring their stake below 75%. Hence, I foresee a notable rally in PSU banks contributing to a higher Bank Nifty in the coming four to five days.

Reviewing the sectoral gainers for the past week, IT, FMCG, and pharma surprisingly emerged as top performers. Defensive sectors have shown resilience throughout the week. Do you believe defensives are likely to continue gaining traction, potentially serving as safe havens amidst the current market exuberance?Vinit Bolinjkar: Certainly, last week witnessed several technical breakouts in midcap and small-cap stocks, but sustainability was limited, with many retracing gains. I anticipate a shift towards defensive sectors leading up to the budget, with telecom likely to show strong performance. Airtel, Reliance, and Indus Towers are expected to perform well. While IT remains a trading pick, I am cautious due to potential downside risks in the US market affecting IT jobs. Pharma and FMCG are top picks due to the expected resurgence in consumption, likely to drive strong performances over the next quarters.

Let's discuss the current activity in the primary markets. Three listings occurred last week, with one more next week and two IPOs opening for subscription. What's your perspective on this sudden influx of IPOs? Any views on Emcure and Bansal Wires, which are opening for subscription next week?Vinit Bolinjkar: We have observed significant market activity with each market high prompting a flurry of new issues, all of which have been well absorbed. Given the high costs associated with IPOs, offerings generally represent solid businesses with strong fundamentals. I expect strong subscription levels for Bansal Wires and Emcure IPOs.

Let's address two significant triggers, one domestic and one global. Domestically, there has been focus on the monsoon, with recent updates indicating good progress covering three-fourths of the country. Globally, there's attention on potential risk aversion ahead of the US CPI data. How should investors navigate these triggers in their investment strategies?Vinit Bolinjkar: The recent shift in rainfall patterns, starting weak in June but expected to intensify through July and August, is a typical trend observed in recent years. Delayed rains shouldn't be a major concern, especially with 75% coverage already achieved. Regarding global triggers, while there's caution surrounding the US CPI data, the US Fed's stance has been reassuring, holding rates steady despite cuts by other central banks. I anticipate more positive cues from the US market, minimizing downside risks. Overall, I foresee a smooth month ahead.

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