What does "credit growth" mean and why is it important for investors?

Credit growth refers to the increase in loans given out by banks and financial institutions over time. In India's case, there's been a healthy 10% year-over-year expansion in lending. This matters for investors because when businesses and consumers can access loans more easily, they tend to spend and invest more, which boosts company revenues, economic activity, and potentially stock prices. A balanced credit environment like India's current situation provides fuel for growth without the risks of economic overheating.

Why is the balanced growth of both loans and deposits significant?

When banks see both loans and deposits growing at similar rates (around 10% in India's case), it indicates a healthy financial system. Deposits provide the funds that banks can lend out, while growing loan books show there's demand for credit from businesses and consumers. This balance means banks can expand lending without taking on excessive risk, creating a stable foundation for economic growth that benefits companies across many sectors.

How do ETFs in this collection differ from individual stocks?

The ETFs (Exchange Traded Funds) in this collection like INDA, EPI, PIN, INDY, and SMIN provide broader exposure to India's market compared to individual stocks. They each hold dozens or hundreds of Indian companies, offering instant diversification. For example, INDY tracks the top 50 companies in India, while SMIN focuses specifically on smaller companies. ETFs are generally less volatile than individual stocks and provide a convenient way to invest in India's overall credit-fueled growth story without picking specific companies.

What are "primary" versus "secondary" beneficiaries of credit growth?

Primary beneficiaries are companies directly involved in the lending process, like the private banks HDFC (HDB) and ICICI Bank (IBN) included in this collection. They directly profit from the expanding loan books and deposit bases. Secondary beneficiaries are companies that benefit indirectly as the increased credit flows through the economy. For example, Tata Motors (TTM) benefits when consumers can more easily get auto loans, while IT service providers like Infosys (INFY) and Wipro (WIT) gain when their corporate clients use loans to fund expansion projects.

Why does this collection include companies from so many different sectors?

Credit growth affects virtually every part of the economy, creating a ripple effect across sectors. When loans become more available, it impacts financial institutions first, then flows to consumers who can purchase more goods and services, and to businesses that can expand operations, invest in infrastructure, or develop new products. This collection captures this ripple effect by including banks (HDB, IBN), consumer companies (TTM), technology firms (INFY, WIT, SIFY), travel providers (MMYT, YTRA), resource companies (VEDL), pharmaceuticals (RDY), and business services (WNS). This diversification helps capture opportunities throughout the economy.

16 handpicked stocks

India's Credit Growth Story

India's banking sector is showing impressive stability with balanced 10% growth in both loans and deposits. These carefully selected stocks and ETFs represent companies positioned to thrive as increased credit availability fuels corporate spending and economic momentum across the country.

Han Tan | Market Analyst

Updated 2 days ago | Published at जून 30