Avoid banking space: Khade

Shashank Khade, VP-Portfolio Management Services at Kotak Securities is of the opinion that one should ignore banking space.

Khade told CNBC-TV18, "It’s better to ignore banks for the time being till the time they settle down in terms of finding a bottom because getting the bottom in place is based on what sort of earnings outlook is for these banks. Unfortunately in the last two-three months it’s only deteriorating for banks. The capital market activity has come down substantially. The fee income of most of the private sector banks as well as public sector banks is under threat. Given the way the uncertainties it will be sometime before people step in start buying into banks because right now the earnings for 2009 are not clear. So it’s difficult to call a bottom for the banking stocks."

He further added, "We have already seen 40% depletion in value in the Bankex, this calendar year and probably a discounted large part of this uncertainty into the banking stocks right now. So my sense is any improvement on the environment or for that matter the oil price; I think it would be time to buy into the banks, which have high Current Account-Savings Account (CASA) ratios and those are the banks, which one needs to bank on."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.