Leading Indian hedge fund Avendus Capital sees banking as a top bet

Andrew Holland, CEO of hedge fund Avendus Capital Alternate Strategies, expressed optimism about the Indian banking sector, attributing it to the upcoming favorable interest rate cycle and the stabilization of net interest margins (NIMs). \r

Despite being a laggard in 2023 and 2024, with the Bank Nifty index returning only 1.9% compared to a broader Nifty 50 rally of 4.6%, Holland believes investors are overlooking the sector. He highlighted the impact of JPMorgan's bond inclusion on bond yields and noted its positive effect on banks' mark-to-market gains. \r

However, uncertainties surrounding a potential change in capital gains tax ahead of the full budget presentation in July might dampen any pre-budget rally, according to Holland.