From overweight to underweight, how sentiments have changed for banks

Large brokerages are fast losing their conviction on the sector that has multiple challenges

Last week’s move by Christopher Woods, global head, equity strategy, Jefferies, to remove HDFC Bank and ICICI Bank from the brokerage’s Asia ex-Japan thematic equity portfolio, after retaining them for almost a decade, came as a shock. Ridham Desai, managing director, Morgan Stanley, turning neutral on banking stocks on Tuesday was another big blow. Such moves are an indication of how big money is behaving.

Morgan Stanley removed banking stocks from its model portfolio when it slashed its weighting on the sector by 500 basis points. Financials was Morgan Stanley’s favourite sector, having an overweight position and accounting for 25