The day’s trading saw private‑bank shares retreat as their price‑to‑book ratio slid to a 10‑year low, underscoring a broader valuation drag that analysts have flagged.
Sriram, the senior fund manager at Baroda BNP Paribas Mutual Fund, points to steady net‑interest income growth and unchanged asset‑quality metrics as the core reasons why the underlying business remains sound despite the valuation slump.
He attributes the current underperformance largely to foreign‑investor outflows rather than a deterioration in fundamentals, warning that the sector may stay pressured until those outflows subside.
Parallel to banking, the interview highlighted promising signs in the chemicals sub‑sector—especially contract development and manufacturing organisations and fluorochemicals—where revenue traction is improving, contrasted with subdued crop‑chemical demand linked to El Niño.
Technology stocks are delivering mixed signals: Cognizant trimmed guidance while Capgemini raised its outlook, reflecting a split view that is mirrored by the fund’s shift from an early‑year underweight stance to a near‑neutral position.
Reliance Industries, still lagging after the Jio Platforms listing, remains a cautionary note; the absence of expected tax breaks and the impact of global diesel margins are keeping investor sentiment cool.
Looking ahead, Sriram sees potential upside if foreign outflows ease and banks can translate valuation relief into share‑price gains, but he cautions that market correction will likely be gradual.