Correction could set in at these levels: IL&FS Investsmart

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Correction could set in at these levels: IL&FS Investsmart

R Sreesankar of IL&FS Investsmart believes that the markets are probably at the top of the range and one could see a correction coming out from here. He says that People are worried about growth

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Excerpts from Closing Bell on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets HUL BSE | NSE 30/05/12 Are Mutual Funds betting on HUL? Other Stocks in this news ITC | Punjab National Bank | Tata Global Beverage |

Q: It's being led by banking today for the last couple of days. How do you look at public sector banks now especially the big ones?

A: The banks have to hike rates to protect their margins. If banks start rolling back on rates, it's not going to be a win-win situation. Clearly, they are on a move. I do not see large amount of interest coming in. I am not able to make out from where that large interest is coming in. But clearly they have been the great winners in the last three weeks.

Q: What is your take on FMCG sector, any favourites in that space?

A: I don't look at the short-term. But I do believe that FMCG space offers great value. For stocks like HLL , the domestic consumption story is intact. Be it Levers, ITC and also Tata Tea , which is more of a global story. The acquisitions that they have made like the Tetley, Jemca, Eight O'clock coffee all these things start consolidating. Also what they mentioned in yesterdays AGM, if it is any indication of where they want to be, I think it is good long-term story.

I like this space. It is one space, which should continue to grow as domestic consumption and the spending pattern increase.

Q: ITC?

A: Yes, even this stock. For ITC, cigarette is churning out so much of cash. Even in their hotel business, their occupancy levels are good. ITC happens to be in all those spaces, which is doing well. So the stock also has to do well.

Q:  In banks, the way we have seen turnover panned out, clearly some kind of retail participation is there. Some confidence and sentiment have built up. What is the advice that you are giving out to your clients right now?

A: We should not get carried by what we are seeing.  Clearly the problem has been that the deposit growth was not keeping pace with the advances growth. Here you had a problem in terms of re-pricing of your assets. That's the reason why you have been seeing the contraction in margins.

PNB was the only exception. Let's not overdo the things. These stocks were under priced, not under performing. In fact, there were absolute losses in the market on a 24 months timeframe till 10-14 days back.

So many of these banks have recovered strongly. From my point of view, these stocks have moved up from the lows and in many cases are up closer to 30%. One has to really look that going forward as to how many of them will be able to deliver the kind of superior returns that they have been delivering. That is the way one has to look at it.

I don't want to say that now things are hunky-dory and people should go and invest in that space.

Q: Disclosures?

A: It is safe to assume that I would have a position on everything that I discussed.