Jefferies says fundamentals for India's banking sector are unlikely to change much given "tepid" loan and deposit growth, "range-bound" net interest margins and "weak" asset quality.
"The reason to own/sell a stock then boils down to valuations," Jefferies says in a report titled "Initiating on India Banks: Going Nowhere" and dated April 5.
Jefferies starts HDFC Bank Ltd, ICICI Bank Ltd and Bank of Baroda with "buy" ratings, but initiates State Bank of India with an "underperform" rating.
Assigns "hold" ratings to Axis Bank Ltd, Punjab National Bank and mortgage lender Housing Development Finance Corp Ltd.
Jefferies believes banks with strong branch expansion such as HDFC Bank, ICICI, and Axis could face smaller problems.