Forget doom and gloom surrounding the markets these days and buy now, as stocks are set to gain while banking stocks are poised to soar, says Dick Bove, banking analyst at Rochdale Securities.

Fears that the European debt crisis will escalate and rattle U.S. markets have sent investors running to the sidelines.

A look at corporate fundamentals and current share prices reveals stocks are oversold.

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"The fundamentals of the industry have never been better. It is only the unknown, unquantifiable, contagion risk which is keeping these stocks down," Bove writes in note to clients, CNBC reports.

"Take this issue away and investors may realize that banks are massively oversold relative to the power of their balance sheets and their earnings potential."

Today's price-to-earnings ratios are too low and when they adjust upward, they'll bring the Standard & Poor's 500 up to around is on its way to around 1,417, which represents an 8 percent increase in the near future.

As for banks, cash, assets and deposits are growing while bad loans are decreasing, especially among regional banks.

"The big regional banks are doing better than the bulk of the industry in terms of profit growth. The biggest banks are not taking share, the big regionals are," Bove says.

"The smallest banks are being driven out of business by the government."

Still, headwinds are threatening markets.

The Fitch Ratings agency says it may downgrade the U.S. next year if Washington doesn't come up with a credible fiscal plan to narrow the country's deficits.

"The United States is the only country (of four major AAA-rated countries) which does not have a credible fiscal consolidation plan," Ed Parker, sovereign ratings analyst, told a Fitch conference in New York, according to Reuters.

"The United States is the only one of the four largest economies whose debt as a percentage of GDP is expected to increase over the next five or six years," Parker adds, referring to the United States, Britain, Germany and France.

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