MarketsEconomic TimesSep 19, 2026· 1 min read
Indian Banks Poised for Re-rating Amid Strong Fundamentals, CIO Predicts
Bank of India Mutual Fund CIO Alok Singh expects a re-rating for Indian banks, driven by low NPAs, healthy returns, and loan growth. He anticipates policy announcements and stronger business numbers will ease concerns around NIMs and FCNR flows, supporting banking, capital goods, and metals for stronger earnings.
Alok Singh, Chief Investment Officer at Bank of India Mutual Fund, anticipates a significant re-rating for Indian banks, citing several underlying strengths. He points to consistently low levels of Non-Performing Assets (NPAs), robust returns on equity, and sustained loan growth as key drivers supporting the sector's fundamental health. This perspective suggests a more optimistic outlook for banking stocks than current market valuations may reflect.
Singh believes that forthcoming policy announcements and improved quarterly business results will alleviate prevailing concerns regarding Net Interest Margins (NIMs) and the stability of Foreign Currency Non-Resident (FCNR) deposit flows. Addressing these issues is crucial for enhancing investor confidence and potentially unlocking higher valuations for bank equities.
Beyond the banking sector, Singh also identifies capital goods and metals as industries poised to deliver strong earnings momentum. This broader view indicates a positive sentiment towards sectors closely tied to economic activity and investment, suggesting a potential cyclical upturn in the Indian economy. The expected re-rating of banks, coupled with strong performance in these industrial sectors, could signal a period of renewed investor interest in Indian equities, driven by improving corporate fundamentals and easing macroeconomic uncertainties.
Analyst's Take
While a bank re-rating is positive, the persistent focus on FCNR flows suggests underlying sensitivity to external liquidity conditions and potential currency volatility. This signals that while domestic fundamentals are strong, global financial market shifts could still influence investor sentiment, potentially leading to a divergence between short-term FII flows and longer-term DII-driven re-ratings, which the market may currently be underestimating.
