Sensex slid 150 points to 52,200 on Thursday, the lowest level in 32 months, following a week of escalating oil prices that pushed WTI crude above $120 a barrel—an increase of 8% in the past 48 hours.
Allspring Global Investments’ senior portfolio manager, Prashant Paroda, said the sell‑off is a “gestational phase” that will likely abate once the Iran‑US standoff resolves, noting the current uncertainty weighs on investor sentiment.
Paroda highlighted that large private sector banks—especially those with recent management changes—could see earnings growth and valuation improvement over the next 12 to 18 months. He added that merger‑related headwinds are easing, a factor that could lift banks’ net interest margins from the current 5.2% to roughly 5.8% by year‑end, according to his internal models.
The banking index has declined 10% in the last month, but Paroda said the sector is still trading at a 30% discount to the 2023 average P/E of 18, implying upside potential if earnings rebound. He noted that deposit growth is projected to accelerate at 6% CAGR, a key driver of future profitability.
Allspring is selectively adding to Indian positions, evaluating upcoming IPOs, and has earmarked a 2–3% equity allocation in banks that meet pricing criteria. The firm expects to benefit from the anticipated easing of interest rate hikes by the RBI, which has signaled a pause in the current 1% tightening cycle.
Looking ahead, Paroda sees the next 12 to 18 months as a window for investors to accumulate at lower valuations, with a potential upside of 15% to 20% in the private bank segment by Q3 2027, provided geopolitical tensions ease and oil prices stabilize.