Digant Haria of GreenEdge Wealth discusses impact of RBI diktat on Kotak Bank, foreseeing continued underperformance and a potential shift in the banking sector towards PSU banks. Haria says: "I do not think Kotak will be the last bank to face these actions. This action can come on more banks and NBFCs in the coming months. I do not think this is the end of the regulator being not so gentle on them."
Digant Haria says there was a negative surprise for financials due to the tightening of retail lending norms by the RBI. The government implemented these measures to prevent inflation from spiking up before the elections. As a result, the financial sector is not expected to perform well until after the elections. Additionally, there is a differentiated approach of foreign institutional investors (FIIs) towards financials. While FIIs are selling financials, they are not buying them . This shift in approach may be due to FIIs need to perform and respond to market conditions.
“Buying and selling is probably happening in the same sectors. We are not selling real estate stocks and going into chemicals or going into the Whirlpools of the world because we still want the sector that we buy should be good and there should be good revenue visibility in the sector.”
“Just because BJP has won the elections and the probability of them coming back with a bang in May is extremely high, it does not make sense to buy the stocks where the results will not be there because this market is in a phase where there is a lot of rotation happening. If the results do not follow through, you are going to be disappointed.”
Nifty PSU Bank is in fact on the verge of a 13-year breakout to touch fresh lifetime highs on the back of good system-wide credit growth, stable asset quality, and attractive valuations. In between, Nifty Bank, which is dominated by HDFC Bank and ICICI Bank, is flat while the bluechip index Nifty has gained just 2.5%.