What is moving the BFSI Sector?

The Banks had been a positive growth aspect for the markets after the correction that was witnessed in the last couple of weeks which led the indices to fall majorly after hitting record highs in the month of February. At present, the overall BFSI (Banking, Financial Sector, and Insurance sector) looks positive as investors showed faith in the sector after the positive provisions that came in Union Budget 2021.  

In the last three trading sessions on the exchanges, Banks and Financials were the top contributors to the indices amid selling in other major sectors like Auto and Energy. Both private and public sector banks performed in-line with expectations of market participants. 

The banking stocks have caught momentum on strong support by the FII (Foreign Institutional Investors) inflows and also after the rising U.S bond yields calmed in the previous week, say analysts. The FIIs invested around $1.96 billion in Banking and Financial stocks in the month of February, which accounts to 50 per cent of the total inflows from them in the Indian markets.  

The public sector banks also boosted the sentiment as the sector gained momentum on hopes of positive growth after privatization buzz. The PSU Bank index has surged 4.79 per cent in the one-month period and will continue to add gains in the near future, say experts.  

Moving further, the Insurance sector gained recently after the sector witnessed surge in February numbers. Shares of SBI Life and HDFC Life rallied to their fresh record highs on Tuesday, March 9. “The sector as a whole posted 23% YoY growth in February with 17.8% YoY growth in WRP”, said, Vishal Balabhadruni of CapitalVia Global Research Limited to BW Businessworld.  

Investors are now seeking buying opportunities in the sector after a correction that occurred in the previous weeks. Experts in the markets also suggested that every correction in the market will further lead to a rally and buying on dips is the current market atmosphere. “The prospects of banking sector have improved with the bygone budget and a healthy correction in Bank Nifty seems to have created value buying opportunities for investors”, Balabhadruni added.