Banking Bill already priced in, be cautious: Udayan

Lok Sabha approved the Banking Amendment Bill on Tuesday. Udayan Mukherjee, managing editor of CNBC-TV18 says this news could not have come at a better time for this set of stocks.

According to him, a fair amount of news is in the price. "There will be a sentimental reaction and maybe some of these stocks go up. But I think a lot of the easy money has been made on many of these names. So, you just want to be a little careful about the names, which have gone up already and try and look at what has not moved," he adds. Banking licence: Waiting for final RBI guidelines, says L&T Below is the edited transcript of his comments on CNBC-TV18. This news could not have come at a better time for this set of stocks. Liquidity is so strong that if you get good news on a sector like banking, it can go beyond reasonable valuations. It is not that the market has to start pricing in this news today. I think a fair amount of that is in the price. Everybody in the street believes that L&T Finance will get a banking license sometime in 2013. The stock is up 65 percent in the last two months. You cannot start today and say okay now let me start getting bullish on L&T Finance because it might get a banking licence. The price action has priced in. It is pretty much reflective of the fact that this is what the market believes. There will be a sentimental reaction and maybe some of these stocks go up. But I think a lot of the easy money has been made on many of these names. So, you just want to be a little careful about the names, which have gone up already and try and look at what has not moved. IDFC, by its own admission, says that they are not interested in a banking license. That is the reason the stock is up only 10 percent compared to such a big move in L&T Finance. But it does not have a big promoter group as such associated with it. Therefore, if it likes it or not, it is in the reckoning for a licence at some point in time, if it puts its hand up. I think for some of the other ones, which have also been going up, there are promoter group concerns like Bajaj and Mahindra Group. We need clarity on whether the central bank will frown at giving a license to some of these names. Maybe some of the southern groups like Cholamandalam Investment, Shriram, where the identifiable promoter group is not in very other large industrial groups and maybe the RBI will look a little bit more charitably towards that. There has been a lot of excitement in some of these old generation private sector banks. There too you need to be a bit careful about what you are buying because some of them by their own admission do not want to be acquired. So, you should not be barking up that tree where a deal is unlikely to happen, though all of them may go up today and select the two-three where a deal might eventually happen if some of the newer entrants want to snap them up.