Public sector banks (PSU banks) and non-banking financial companies (NBFCs) have been in the spotlight in recent weeks, with many stocks from these sectors showing steady upward movement.
Experts say the positive sentiment could continue in the coming quarters, particularly if monetary policy supports growth further.
With the Reserve Bank of India (RBI) scheduled to meet soon, market watchers are keeping a close eye on any rate-related decisions. A surprise rate cut, if it comes, could act as a major boost for banks and financiers, creating additional demand in these segments.
PSU BANKS ATTRACT INVESTORS
According to Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, PSU banks remain one of the most attractive options in the current market.
“The RBI meeting is likely to be a part of it. But if it surprises the market with one more rate cut, maybe 25 basis points, it will be a big booster for the market. Interest rates are already very benign, which suits the economic environment. As far as the entire space is concerned, everything is looking attractive. But particularly, we have focused more on the public sector banking space. The stocks have been doing quite well for the last few days. Valuation-wise, they look attractive and for the last four to five quarters, they have been consistent in delivering a growth of 12–13%,” said Kant.
He added that PSU banks such as Bank of India and Bank of Baroda could be good picks for investors. “One can look at accumulating these stocks on declines and riding the trend for the next couple of quarters,” he said.
NBFCs, HOUSING FINANCE COMPANIES IN FOCUS
In addition to PSU banks, experts say NBFCs—especially housing finance companies—are worth considering. With lower interest rates and rising disposable incomes, affordable housing demand is expected to stay strong.
Kant suggested a basket approach for housing finance companies. “Maybe PNB Housing Finance, LIC Housing Finance, and Aadhar Housing Finance as a basket one can look into. Affordable housing is one sector where traction is likely to play out. It is better to play with housing finance companies rather than picking individual real estate stocks,” he noted.
METALS SHOW MIXED TRENDS
While banks and NBFCs are attracting most attention, investors are also tracking metals. Global prices for most metals, except copper, have seen corrections. Copper is up about 15–16% year-to-date, while aluminium, zinc, tin, and steel have declined.
Domestically, the Indian government has been working to curb dumping of cheap imports, which has supported local steel prices. According to Kant, select metal companies could still offer opportunities.
“In India, steel prices have seen some attraction. Domestic-focused companies like Hindalco and JSW Steel are still worth looking at. The sector is volatile, but we think metals have an upside for the next six months. Activities are expected to pick up, and there is always a tendency for a run-up before the budget in January 2026,” he explained.
Experts believe PSU banks and housing finance NBFCs provide the most stable opportunities in the near term. While metals may offer short-term gains, the sector carries higher volatility. For retail investors, a diversified approach—mixing strong PSU banks with housing finance NBFCs—could help balance growth prospects with risk.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
