In the current economic climate marked by an extended pause in hawkish interest rates and no imminent economic downturn, global brokerage firm CLSA has amplified its overweight stance on sectors such as banking, energy, and industrials. This shift comes even as other international brokerages have lowered their price targets for HDFC Bank due to expected challenges following a merger.
The bank is predicted to face a short-term decline in key financial metrics like net interest margin, net worth, and asset quality after its merger with parent company HDFC. This projection contrasts with the recent performance trend of the Nifty index.
This move by CLSA underscores a divergent approach towards the banking sector in comparison to other foreign brokerages. While some have cut their price targets for HDFC Bank anticipating post-merger hurdles, CLSA's escalated stance seems to be driven by the broader macroeconomic environment devoid of any looming economic downturn.
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