Accumulate Allahabad Bank, OBC: V Kapoor

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Accumulate Allahabad Bank, OBC: V Kapoor

Vibhav Kapoor of IL&FS Investsmart is of the view that one can look at accumulating public sector bank like Allahabad Bank, Oriental Bank of Commerce gradually as they are available at mouthwatering valuations.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » RELATED NEWS Allahabad Bank touches 52-week low ALSO READ See previous views by Vibhav Kapoor See what other Experts & Brokerages are saying about Allahabad Bank See messages about Allahabad Bank Allahabad Bank BSE | NSE 29/05/12 Are Mutual Funds betting on Allahabad Bank? Other Stocks in this news Oriental Bank of Commerce |

Vibhav Kapoor of IL&FS Investsmart is of the view that one can look at accumulating public sector bank like Allahabad Bank , Oriental Bank of Commerce gradually as they are available at mouthwatering valuations.

Kapoor told CNBC-TV18, " don't think given the current conditions this is the last rate hike we have seen. So, you could see maybe another 50-75 bps by the end of the year, provided oil prices remain where they are or if they are go up further then things could get much worse.

He further added, "So, the real issue is going to be what happens to oil prices. If oil prices come down substantially then at least you have some sort of a base and the situation could look better. But actually it is oil prices, other commodity prices - metal prices, steel prices are going up. There are a whole lot of other issues as well, which one would need to look at."

"So, in short effectively if global commodities continue to go up, if oil prices continue to go up and if they don't go down from here then I think you could see further interest rate hikes happening in the next 3-6 months. That is obviously going to be negative for rate sensitives. Yes there are a few public sector banks that are now really trading at very mouthwatering valuations. Stocks like Allahabad Bank, OBC (Oriental Bank of Commerce) are trading close to 0.5-0.6 times adjusted book value for '09."

"So, one could look at accumulating these stocks very gradually if you are a reasonably medium or long-term investor. But real estate for example as a sector could see still more downside because real estate prices are likely to come down when interest rate increases further. So, selectively one could do cherry-picking and very gradual buying as these stocks go down further."