SBI’s margin drop set the tone for PSU banks, but analysts believe the downside could be nearing an end. Focus is shifting to private banks, seen as better placed for FY27, with foreign investor flows expected to influence stock moves. HDFC Bank and Axis Bank are highlighted as top picks, while Paytm is favored for its payments business.
Financial services secretary M Nagaraju reviewed progress on financial inclusion schemes with public sector and major private banks, urging them to expand digital infrastructure for stronger last-mile reach. The focus is to improve access for underserved communities, moving services beyond physical branch networks by widening connectivity and adoption of digital financial tools.
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Sohum Asset Managers is moving toward safer large-cap stocks as global uncertainty looms. The fund is overweighting domestic businesses and underweighting global exposure, a tilt that has supported performance. Reliance Industries is a top bet for meaningful upside, while private sector banks take a significant share. FMCG is largely avoided due to expensive valuations.
Kotak AMC’s Shibani Sircar Kurian says the current market phase favors large and midcaps over smallcaps, with comfort coming from reasonable valuations and supportive historical trends. She points to banking as a standout: strong growth with stable asset quality, while telecom fundamentals are improving. On dips, she suggests adding equities, especially private banks.
Over the past decade, public sector banks have lost major ground in deposits, with their share dropping from 76.3% to 56.3%. Private banks, by contrast, have steadily absorbed the shift, rising from about 20% to nearly 35%—suggesting a growing preference among depositors, especially wealthier customers.
More than $6 billion in fresh FDI has flowed into India’s private banks, including Yes Bank and Federal Bank, signaling renewed global confidence. Analysts point to improving credit quality, cost moderation, and early signs that private capex could be reviving. Together, these factors are fueling a more bullish outlook for the sector as investors re-rate growth and stability.
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