Banking And Financial Sector Update - Second Wave Impacts Growth, NPA; Revival In H2 FY22: ICICI Direct
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ICICI Direct Report
The banking sector has been slightly underperforming against the overall market in recent months (Bank Nifty up 3.4% versus the Nifty up 5.9% in the past three months) as emergence of a second wave has made markets cautious.
The pandemic has halted the gradual progress on credit growth and delayed a swift recovery by posing asset quality challenges in the near term.
However, we believe the impact of the second wave should be lower than last year (given partial/localised lockdowns).
In addition, we believe that pent up demand, rising input prices and capacity utilisation should keep retail growth unabated and boost capex led credit demand ahead.
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