What Does Kotak Institutional Equities Expect for Banks and Autos in the Coming Quarters?
Kotak Institutional Equities foresees a mild phase of weakness in bank loan growth, narrowing net interest margins, and higher funding costs; however, it expects these headwinds to ease gradually as credit momentum revives. The firm believes that improvement in consumption and lower cost of deposits could support banks’ profitability later in FY26.
The report highlights that soft credit costs and healthy balance sheets leave enough room for earnings recovery once systemic liquidity stabilizes. Public-sector banks may particularly benefit from treasury gains, while private banks continue to leverage digital acquisition and cross-selling.
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On the automobile front, Kotak expects GST cuts and the next pay-commission rollout to stimulate demand across two-wheelers and passenger cars. Lower raw-material costs and higher rural purchasing power are likely to further aid margin expansion in FY26–27.
The brokerage views the domestic manufacturing and import-substitution story as a multi-year structural driver, benefiting both auto ancillaries and capital-goods companies. Its base-case scenario assumes steady inflation and policy support for credit-driven growth.
Kotak’s analysis underscores that banking and auto sectors are among the top beneficiaries of India’s macro recovery, aided by healthy government capex, infrastructure spending, and gradual rate normalization.
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In conclusion, Kotak expects both sectors to deliver steady performance in FY26 with improving earnings visibility, provided inflation remains within RBI’s tolerance band and policy continuity supports consumption demand.
Investor Takeaway: Indian-Share-Tips.com Nifty & Derivatives Expert Gulshan Khera, CFP®, who is also a SEBI Registered Investment Adviser and Tiger Technical Analyst at Indian-Share-Tips.com, observes that banking and auto stocks may offer value buying opportunities as macro stability and credit uptick return to the fore in the next two quarters.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment adviser before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
