Stocks to Buy | Sandip Sabharwal highlights silver’s breakout and investment potential

Sandip Sabharwal in an interview to ET Now said that banks are starting to see pressure on their Net Interest Margins (NIMs) after several rate cuts. In the short term, margins may dip. But in the long run, lower interest rates improve asset quality, which matters more than a small margin hit.

He explains NBFCs benefit more in a rate cut cycle. They borrow in bulk and often have fixed-rate loans. So, rate cuts reduce their costs faster. According to Sandip, high-quality NBFCs are likely to outperform banks in this environment.

Sandip points out that early monsoon rains have hurt the air conditioning industry. Last year’s growth raised expectations for this summer, so companies stocked up heavily. But the rains caused demand to drop, leading to excess inventory and possible price cuts. He also notes cement companies face challenges.

They tried raising prices, but demand fell due to the rains. Valuations are very high — for example, Ambuja Cement trades at around 60 times earnings. Sandip suggests waiting for a correction before buying, as a normal monsoon would support long-term demand.

Sandip highlights China’s dominant role: 60% of rare earth production and 90% of processing. Their supply restrictions affect many sectors beyond autos, including electronics and clean energy. In the near term, autos may suffer most. Some two-wheeler makers have low inventory, though companies like Maruti and Mahindra have stock for two months. Sandip warns this is a global disruption and its duration is uncertain due to China’s unpredictable policies.

Sandip says Reliance has quietly outperformed recently, rising from about ₹1200 levels. The company is moving past heavy investment phases, and these projects will soon start delivering returns. He agrees with brokers who expect earnings and return ratios to improve in the next two years, signaling more upside for Reliance stock.

Sandip explains gold’s story has been stronger due to global uncertainties. Silver had lagged behind, breaking its usual correlation with gold. Now, silver hit a record high on MCX. If this breakout holds, silver could see double-digit gains. Sandip says many investors are underexposed to silver, making it an interesting diversification option alongside gold.