Budget 2023: Why banking stocks are surging before FM Sitharaman’s speech

According to stock market experts, banking stocks are rising because of the two major reasons — Adani Enterprises FPO passing the acid test and getting subscribed over 100 per cent and expected credit growth policy for Indian banks in upcoming budget. They said that expectations are high about government’s thrust on capex and focus on fiscal consolidation. They went on to add that private banks like ICICI Bank and Axis Bank have given strong quarterly numbers and hence they are expected to continue attracting bulls’ interest. They said that Prime Minister Narendra Modi’s thrust to make India a $5 trillion economy is expected to come with PLI schemes for manufacturing sector and hence State Bank of India or SBI, Bank of Baroda and Punjab National Bank (PNB) may attract attention of long term positional investors.

Speaking on the reason for rise in banking stocks ahead of FM Nirmala Sitharaman’s budget speech, Market expert Sugandha Sachdeva said, “As the union budget approaches, expectations are high for a significant capex thrust and a simplified tax regime, but the government’s focus on the fiscal consolidation path would be particularly crucial for the markets as that will ensure macroeconomic stability and lead to renewed capital inflows.”

Connecting Bank Nifty rally with Adani Enterprises FPO, Sandeep Pandey, Former Deputy Vice President at HDFC Bank said, “After the US-based short seller Hindenburg Research raised concern over Adani group companies debt positioning, banking stocks had witnessed heavy beating due to its debt exposure to Adani group companies. However, once the Adani Enterprises FPO has sailed through after over 100 per cent subscription in three days of bidding, bulls are coming back at banking stocks.”

Sandeep Pandey went on to add that rally in banking stocks can be attributed to expected credit policy announcement by Finance Minister Nirmala Sitharaman in budget 2023 as the Reserve Bank of India (RBI) has made it clear that we can’t remain in high interest rate regime for long and at the same time liquidity flow has to remain under control for keeping inflation under check. So, a check on deposit rates is expected to keep corporate lending under check and hence market has gone bullish on banking stocks ahead of budget 2023 speech of the FM.

Asked about banking stocks to buy for long term, keeping government’s focus on capex and credit regime, market experts recommended these 5 stocks to buy today and those five stocks are ICICI Bank, Axis Bank, Bank of Baroda, SBI and PNB.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.