Dip in bank stocks provides a buying opportunity

Banking stocks have been underperformers in the last one month. As per data from Value Research, the universe of Equity (Banking Funds) is down by 9.41% over the last month. As compared to this, the Sensex is down 5.24%.

Amongst individual stocks, SBI is down from Rs 2414 to Rs 2044, Punjab National Bank is down from Rs 834 to Rs 725, while private sector HDFC Bank is down from Rs 772 to Rs 658. “There are fears that the rupee depreciation will slow down the economy further. Volume growth for banks will be slow and margins will be affected, and hence investors sold off bank stocks, ” says

Alok Churiwala, Managing Director, Churiwala Securities. However analysts feel this sharp correction has made valuations of bank stocks attractive and investors should accumulate banking stocks at these levels.

“A lot of PSU bank stocks are trading at less than their book value making valuations extremely attractive. Investors should buy a basket of banking stocks in their portfolio,” says Vaibhav Agarwal, VP (Research), Angel Broking.

Stocks like Punjab National Bank, Canara Bank, Bank of India are some banks that trade below their book value.