Gaurang Shah Reveals Best Buy: The Indian stock market is buzzing with fresh opportunities! Experts predict a bullish rally in specific sectors after the Reserve Bank of India (RBI) relaxed risk weight norms for loans to microfinance institutions (MFIs), boosting liquidity for banks and NBFCs. Gaurang Shah, Senior Vice President at Juicy Financial Services, reveals where smart money is flowing next.
IT, Financials, Cement and FMCG Set to Shine
Gaurang Shah highlights IT, financials, cement, and FMCG as top sectors for long-term investors. While small and mid-cap stocks may see short-term corrections, he advises a staggered buying approach.
“Start small and add more during dips,” says Shah. Key players like Mahindra Finance, Bajaj Finance, L&T Finance, and Shriram Finance are poised to benefit from RBI’s liquidity push. Rural-focused NBFCs like CreditAccess Gramin and AU Small Finance Bank also top his list, thanks to growing demand in grassroots economies.
The cement sector gains traction with infrastructure projects, while FMCG giants ride on steady consumer spending. Shah warns against lump-sum investments, urging patience for deeper corrections in volatile segments.
Banks and NBFCs Get a ₹8,000 Crore Liquidity Boost
The RBI’s decision to cut risk weights on MFI loans from 125% to 100% (and 75% for low-risk cases) is a lifeline for banks and NBFCs. This frees up capital, improving loan growth and reducing borrowing costs.
Banks like Bank of Baroda, Federal Bank, and SBI could see a 25–45 basis-point rise in capital adequacy ratios. For NBFCs, cheaper funds mean better profit margins. Stocks like Bandhan Bank and IndusInd Bank, hit earlier by high-risk weights, are rebounding sharply.
Analysts predict a 160-basis-point capital boost for Bandhan Bank, easing pressure on its rural-heavy portfolio. Mahindra Finance, with 40% exposure to unsecured rural loans, emerges as a top pick. This move signals RBI’s confidence in India’s financial stability, fueling optimism for sustained growth in banking stocks.
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