Here's what market veteran SP Tulsian has to say about banks and NBFCs

SP Tulsian of sptulsian.com if of the view that market participants seems to be moving away or exiting from financials and banking stocks. Usually, Bank Nifty is always heavily invested into by all be it funds or investors. It always had higher weightage in the Nifty with over bought positions.

“Many of them are now exiting from the financials and moving into the other sectors so I don’t know till what this pain points continues but only hope is that the counter is going in the oversold position which is the most bullish factor," he said. "So if you have the delivery based selling seen coming in these stocks then it is a different case but if you see Shorts also getting built in the Bank Nifty and individual bank stocks then that could be the severe point going forward in the form of the short covering but the pain point is people are exiting or reducing their weightage in the banks and financials,” he added.

With regards to NBFCs he said, “When the gold financials are taking a hit like Manappuram Finance and Muthoot Finance, obviously the Shriram Transport Finance Company and Cholamandalam Finance would also take a hit because we have seen 85-90 percent fall in the sales of the commercial vehicles - whether you talk of heavy commercial, medium commercial and all those things and both were seem to be the leader in financing the commercial vehicle market."

However, the best part is that Cholamandalam Finance has always outbeaten the downturn and showed good performance and Shriram Transport has always been seen as the high beta stock, it swiftly gets corrected by about 10-15-20 percent but swiftly bounces back as well. If you have a longer time horizon of 4-6 months no one can catch the bottom but if you go by their fundamentals, the valuation aspects seem to be quite comforting. If you are a compulsive buyer then look for buying this maybe after a week or so, but otherwise it is better to look for larger banks like HDFC Bank and all those things if you are underweight on this.”

“Maybe both the NBFCs are looking good on a fundamental basis and they have the high beta nature but we will not advice now but maybe allow them to correct further in the next 10-15 days and then look, or look at private sector banks instead of the NBFCs,” he further added.

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