Non-banking financial companies and private banks are better positioned than public sector banks within India's banking sector, Chowhan said.
This assessment comes as macroeconomic volatility threatens corporate profitability, forcing investors to shift toward defensive sectors and structural growth themes to mitigate potential losses.
Chowhan, a portfolio manager at Abakkus Asset Manager, identified crude-oil prices as the dominant macro risk currently facing the market. He said this volatility is expected to shave 100–200 basis points [1] off corporate earnings in the upcoming quarters.
To counter these risks, Chowhan said he favors defensive and structural themes. These include renewables, pharmaceuticals, and domestic manufacturing. These sectors are viewed as more resilient against the fluctuations of global commodity prices.
Conversely, the information technology sector is being viewed with caution. Chowhan said this hesitation stems from valuation concerns related to artificial intelligence, which may complicate the growth trajectory for IT firms.
In the financial sector, the preference for private banks and NBFCs over public sector units suggests a shift in where analysts see the most stability and growth potential. The distinction highlights a diverging outlook between state-run entities and private financial institutions during periods of macro instability.
“NBFCs and private banks are better positioned than public sector banks”
The preference for private financial institutions over PSU banks reflects a broader strategic pivot toward agility and risk mitigation in the Indian market. By favoring defensive sectors and cautious of AI-driven IT valuations, investors are prioritizing capital preservation against the specific inflationary pressure of crude-oil costs, which directly impact corporate margins across the subcontinent.
