Bluechip Banking Stocks Trading At Huge Discounts: Should You Buy The Dip?

First and foremost, almost all banks have taken a big hit amid the ongoing Ukraine-Russia crisis and it is the high beta of these banking stocks that is playing out. What high beta means during correction phases is that banking and finance stocks tend to see sharp corrections and then come out strongly after the situation stabilizes. Critical example can be Bajaj Finance -In May 2020 amid the corona crisis the NBFC firm corrected to as low as Rs. 2000 and then on has moved sharply.

Banking stock trading at huge discount from their 52-week high

 

Bank	All time high	Current price as at the close of March 11, 2022	Discount
HDFC Bank	Rs. 1725	Rs. 1396.8	19.00%
ICICI Bank	Rs. 867	Rs. 677.9	22.00%
SBI	Rs. 549	Rs. 470.35	14.00%
Bajaj Finance	Rs. 8050	Rs. 6628	17.60%
Kotak Bank	Rs. 2253	Rs. 1763	22.00%

The above is just to signify that the current correction has led these stocks to be available at a hefty discount.

 

Fundamentals at the banks are not off the track

Say if we talk about HDFC Bank, fundamentally the bank like other banks is not in a problem. Talking about its recent quarterly results, the bank's profit are on a consistent rise with net profit at Rs. 10,342.2 crore. Also if we talk about the net NPA situation it has been ever improving from the last 2 quarters. So, fundamentally nothing looks bad at the bank.

 

More of a banking industry issue currently given the world over turmoil

Notably currently the issue is more of a banking industry's problem and the reasons for this are aggressive FII selling, asset side risk panning out for banks and amid the geo-political crisis there is also the case that bank's NPAs may take a big hit because of businesses being in an awkward situation once again due to businesses not being able to take off well amid the crisis at hand. So, as the problem will possibly end in due time, these stocks which are fundamentally not off track will once again show high growth.

Should you buy bluechip banking and finance stocks available at big discounts?

But if you believe in these large leading bluechip banking entities which will only grow in the future and India's growth story connect with banking as a whole, they are certainly good bets from a long term perspective and can help you become richer. So, while these stocks given the current crisis, can fall even further they provide even a good opportunity to buy at the dips currently available. But certainly if you cannot stomach in too much volatility please stay away at the current juncture.
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Disclaimer:

The story is not a recommendation to buy in shares but is a general analysis. We are not professional financial advisors, please take market linked risky bets after thorough analysis.

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