This market expert explains why the banking sector will account for 44% of FY24 earnings

Dhiraj Agarwal, Co-Head — Equities at Ambit Capital, believes that the banking sector will play a pivotal role in shaping the earnings landscape for FY24 and is likely to contribute significantly, accounting for approximately 44 percent of the overall earnings during this period. This projection highlights the crucial position that banks hold within the Indian economy and their potential impact on the financial market.

“Banking will account for about 44 percent of the earnings growth in FY24 and at some point in time, we will start seeing margin pressure because deposit costs are going up and lending rates are not keeping pace, and especially in a flattening to softening headline interest rate environment, it will be that much more difficult to pass on the lending or rise in the deposit costs in terms of building higher lending rates,” he said in an exclusive interview with CNBC-TV18.

He also mentioned that it is unlikely for the Nifty to reach a level of Rs 980-990 of earnings per share (EPS) in FY24. This statement implies that the market may face challenges in surpassing the mentioned earnings target within the given timeframe.