India's battered bank stocks offer a compelling buying opportunity, with valuations for some large private ​lenders near their cheapest levels, said Amish Shah, head of India ‌research at BofA Global Research.

Financials hold the heaviest ​weight among sectors on the benchmark Nifty 50 index, ⁠with four banks featuring in the flagship index's top 10 heavyweight stocks. The Nifty Bank index has fallen 8% since the start of the ‌Iran war at the end of February, underperforming the benchmark Nifty 50, which is down 4.7% over ‌the same period.

That decline has pushed some large ‌private ⁠banks to trade 1.5 to 2.5 standard deviations below ⁠their historical average valuations, making them among the cheapest they have been, Shah told Reuters in an interaction.

The decline comes amid a sharp 34% surge ​in crude oil prices since the ‌Iran war, which has threatened growth and fanned inflation worries in Asia's third-largest economy.

Foreign investors led the sell-off in banks, offloading a record 606.55 billion rupees ($6.53 billion) in shares ‌of financial services companies in March.

"The valuations are extremely ​attractive," Shah said, adding that BofA expects a rate hike by the Reserve Bank of India later ⁠this financial year, which would further support banks by improving margins and strengthening their overall earnings outlook.

India's largest private lenders HDFC Bank ‌and ICICI Bank trade at a price-to-book value of 1.8 times and 2.3 times their fiscal year 2027 earnings estimate, as per BofA Global Research.

IT TO UNDERPERFORM

On the contrary, Shah expects information technology stocks to continue their underperformance this year despite the ongoing rally driven by rupee depreciation.

He said the artificial ‌intelligence disruption story is real and could slow IT growth in the ​short run as clients reassess spending and the impact of automation on outsourcing demand.

Over the medium to ⁠long term, however, Shah said broader AI adoption across enterprises could ⁠create a new growth runway for the sector as companies increase spending on implementation.

The IT index has risen ‌3.1% since the beginning of the war at the end of February.

BofA has an "Underweight" rating for India's IT ​sector, while it rates large private sector banks "Overweight".

Published on April 9, 2026