Macquarie Capital rates HDFC Bank a 'buy', sees this potential near-term trigger

Suresh Ganapathy, a banking analyst at Macquarie Capital Securities, has a 'buy' recommendation on HDFC Bank, expecting its potential MSCI index inclusion in August to drive $4 to $5 billion in buying activity. He forecasts 14% to 20% EPS growth despite tempered loan growth. Ganapathy is positive on private sector banks due to attractive valuations and stable returns but avoids PSU banks due to upcoming regulatory changes and populist measures. He notes that PSU banks' recent high returns may reverse with rising credit costs. While cautious on the insurance sector due to competitive pressures, he sees potential valuation upgrades for SBI Life.