ICICI Bank, HDFC Bank, SBI are Motilal Oswal's top picks in banking sector

Oswal's top stock picks in banking sector include ICICI Bank, HDFC Bank, State Bank of India (SBI), and AU Small Finance Bank. Earnings downgrades in the Indian financial sector are gaining momentum, driven by margin pressures and asset quality concerns, particularly in unsecured lending segments, according to analysts at Motilal Oswal . Despite these challenges, the brokerage believes a turnaround is within reach by the third quarter of the current financial year. Motilal Oswal noted that earnings in the financial space have slipped into decline due to high funding costs impacting margins and slower loan growth. Banks continue to face difficulties in transmitting rate cuts, while asset quality stress in unsecured segments weighs on near-term profitability.