Ashwini Agarwal, Founder and Partner of Demeter Advisors finds frontline banks resilient. In a chat with CNBC-TV18, he highlighted the favourable credit cycle, emphasising that unless an unforeseen crisis hits the retail credit sector, the financials space appears secure, thanks to the Reserve Bank of India's (RBI) measures to curb unsecured consumer lending.
The central bank on November 16 increased the risk weights on certain consumer loans mandating banks to set aside additional capital against such unsecured loans.
Agarwal is cautious about stretched valuations in defence and railways and wary of potential disappointments in order flows and payment disputes with the government as the primary customer.
In the listed space, he advised keeping an eye on mid-sized companies, especially those in sectors where the challenges of the past two years are turning into tailwinds. He specifically mentioned downstream chemicals and EPC companies with differentiated business models as promising areas.
He believes overall, the market is currently stable and healthy, but potential uncertainties, such as the upcoming state elections, loom.
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(Edited by : Shweta Mungre)