Banking vs realty: Which stocks to buy in the current Indian stock market?

Stocks to buy today: Amid Indian stock market turning negative after the nifty 50 index fell below the 24,200 mark, investors are busy finding value picks as the frontline index Nifty 50 is down over 8.25 per cent from its record highs.

According to stock market experts, investors are advised to look at segments like IT, realty, banking, etc., that are rate sensitive. They added that rate-sensitive stocks have remained under pressure for a long and it would be easy to find discounted stocks in these segments. However, one always looks to maximise one's returns. Investing in banking or realty stocks has become tricky for such investors.

Banking vs realty: Which stock is better?

Asked about the segment(s) where one can bet high in the current Indian stock market, Vikas Jain, Head of Research at Reliance Securities, said, "Loan growth continues to moderate as banks now look to drive deposits growth to adjust their CD ratio. Loan growth continues to be healthy among the Retail and SME segments. Deposits' growth slightly improves to 12%, while banks remain competitive in gaining deposits' market share. The contraction of the CASA ratio continues for most banks as they aim to achieve faster deposit growth through TDs. Margins are expected to be mostly range-bound with a slight negative bias, while the healthy share of the MCLR book will help negate the overall impact."

"While banks usually produce steady profits, particularly during economic downturns, as they profit from the demand for credit, the Indian real estate market is expanding quickly, and well-managed businesses can yield large returns over the long run. The government frequently supports public sector banks, which can provide a safety net during emergencies. You can consider investing in real estate equities if you are a long-term investor with a high-risk tolerance. You might favour banking stocks if you're a cautious investor looking for steady profits," said Pravesh Gour, Senior Technical Analyst at Swastika Investment.

"The Private Banks sector is currently trading at a P/B ratio of 2.2x, near its historical average of 2.5x, while its RoE stands at 14.5% in line with the long-term averages while the real estate sector has witnessed a strong run up over the past few years trading at 40% premium to historical averages, so we believe banking sector could outperform from current levels," the Reliance Securities expert added.

Banking stocks to buy today

On stocks to buy today in the banking space, Abhishek Pandya, Research Analyst at StoxBox, said, “Upon reviewing management's commentary, quarterly performance, and the valuation of banks and real estate stocks, the banking sector is currently more attractive than the Realty sector. The overall outlook for banking remains positive, with major private banks like HDFC Bank and ICICI Bank reporting strong performance and a promising outlook for the upcoming quarters. Additionally, according to MSCI index revisions, HDFC Bank, a leading player in the banking sector, is expected to benefit significantly from these changes. Its weight in the MSCI Emerging Markets Index is projected to increase, potentially attracting $1.9 billion in foreign institutional investment (FII) inflows."

"This highlights the considerable investor interest in HDFC Bank and the broader banking sector. Hence, The banking sector, driven by strong performances from HDFC Bank and ICICI Bank, appears more attractive than real estate, bolstered by robust outlooks, MSCI index revisions, and significant potential FII inflows,” the StoxBox expert concluded.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.