Banking stocks look attractive despite rally; ICICI Bank, SBI, Canara Bank among top picks
An analyst remains bullish on banking and NBFC stocks, naming ICICI Bank, SBI, Canara Bank and Bajaj Finance as top picks amid attractive valuations and stronger H2 earnings prospects.
- Aug 4, 2026,
- Updated Aug 4, 2026 4:07 PM IST
Financial stocks are back in the spotlight, with Globe Capital’s Gaurav Sharma making a selective but distinctly bullish case for banks and non-banking lenders as earnings momentum improves and valuations remain undemanding. His strongest conviction lies in a mix of large private banks, smaller regional lenders and PSU banks that, in his view, are entering a stronger second half with cleaner books and better operating visibility.
Selective bets, not a blanket call Sharma made it clear that his approach to the banking pack is far from broad-based. “We are very selective on the banking space,” he said, identifying ICICI Bank Ltd as his preferred large-cap private lender, while also backing Karur Vysya Bank Ltd, City Union Bank Ltd and Federal Bank Ltd among smaller names.
On the state-run side, his top picks were Canara Bank, Indian Bank Ltd and State Bank of India. The common thread, according to him, is valuation comfort and improving fundamentals rather than momentum chasing.
Why the banking case is strengthening The core of Sharma’s thesis rests on three pillars: inexpensive valuations, healthier balance sheets and the prospect of stronger earnings in the coming quarters. “The valuations are still very attractive, very, very reasonably priced in. The book, the balance sheet is pretty much clean,” he said.
That matters in a market where investors have been rewarding earnings resilience and punishing weak execution. Against that backdrop, banks with stable asset quality and room for earnings upgrades could regain leadership, especially if deposit flows improve and credit growth holds up.
Second-half optimism gains traction Sharma’s outlook becomes more constructive as the fiscal year progresses. “The upcoming quarters [are] to be fairly impressive. Second half will certainly be better than what we have seen in the past,” he said, arguing for a “clear-cut” positive stance on banking stocks.
The comment also fits into the broader market mood outlined in the discussion, where he said large-cap earnings across sectors have generally surprised positively. In that setting, financials could benefit from a rotation toward fundamentally stronger, reasonably valued names.
NBFCs set the tone Beyond banks, Sharma said NBFCs are offering an important read-through on the health of the wider financial space. He pointed to Bajaj Finance’s performance as evidence that well-run lenders are still delivering robust numbers despite a mixed macro backdrop.
He added that he remains “bullish and constructive” on other NBFC counters such as Cholamandalam Investment and Finance, Mahindra & Mahindra Financial Services and L&T Finance. For investors, the message is clear: in financials, selectivity remains critical, but the sector’s earnings and valuation setup is becoming harder to ignore.
Financial stocks are back in the spotlight, with Globe Capital’s Gaurav Sharma making a selective but distinctly bullish case for banks and non-banking lenders as earnings momentum improves and valuations remain undemanding. His strongest conviction lies in a mix of large private banks, smaller regional lenders and PSU banks that, in his view, are entering a stronger second half with cleaner books and better operating visibility.
Selective bets, not a blanket call Sharma made it clear that his approach to the banking pack is far from broad-based. “We are very selective on the banking space,” he said, identifying ICICI Bank Ltd as his preferred large-cap private lender, while also backing Karur Vysya Bank Ltd, City Union Bank Ltd and Federal Bank Ltd among smaller names.
On the state-run side, his top picks were Canara Bank, Indian Bank Ltd and State Bank of India. The common thread, according to him, is valuation comfort and improving fundamentals rather than momentum chasing.
Why the banking case is strengthening The core of Sharma’s thesis rests on three pillars: inexpensive valuations, healthier balance sheets and the prospect of stronger earnings in the coming quarters. “The valuations are still very attractive, very, very reasonably priced in. The book, the balance sheet is pretty much clean,” he said.
That matters in a market where investors have been rewarding earnings resilience and punishing weak execution. Against that backdrop, banks with stable asset quality and room for earnings upgrades could regain leadership, especially if deposit flows improve and credit growth holds up.
Second-half optimism gains traction Sharma’s outlook becomes more constructive as the fiscal year progresses. “The upcoming quarters [are] to be fairly impressive. Second half will certainly be better than what we have seen in the past,” he said, arguing for a “clear-cut” positive stance on banking stocks.
The comment also fits into the broader market mood outlined in the discussion, where he said large-cap earnings across sectors have generally surprised positively. In that setting, financials could benefit from a rotation toward fundamentally stronger, reasonably valued names.
NBFCs set the tone Beyond banks, Sharma said NBFCs are offering an important read-through on the health of the wider financial space. He pointed to Bajaj Finance’s performance as evidence that well-run lenders are still delivering robust numbers despite a mixed macro backdrop.
He added that he remains “bullish and constructive” on other NBFC counters such as Cholamandalam Investment and Finance, Mahindra & Mahindra Financial Services and L&T Finance. For investors, the message is clear: in financials, selectivity remains critical, but the sector’s earnings and valuation setup is becoming harder to ignore.