Prefer private sector banks: Fortune Financial

Prefer private sector banks, says Abhijit Chakraborty, Fortune Financial.

Chakraborty told CNBC-TV18, "Banks can be positive surprise for the market in Q4 numbers, one is because of the high credit growth that we are seeing in this period, which has come after the couple of quarters of lackluster credit growth and secondly, I feel that the deposit rates which were the biggest cause of concern are not likely to move up from here because at 9.5 to 10% kind of a one year deposit rates, banks would be able to garner sufficient liquidity in the system because the compatible investment avenues are not yielding as much."
He further added, "I think the banks would not require to increase the deposit rates going forward, while the transmission on the advances side will continue to happen, I think the advances rates can go away by another 50-75 bps over the next six months time. So I think till the time the interest rates in the economy remain hard for the next couple of quarters, banks will now start to see an improvement in the margins or atleast hold the margins, which I think is going to have a positive impact on Q4 numbers."
"I would still prefer the private sector banks, which have got a high CASA; Axis Bank and HDFC stand among that. In the cozy private cozy public sector kind of a profile, I like J&K Bank because of its strong performance operationally and extremely low valuation. In PSU banks I think SBI has gone through its period of correction and consolidation and Punjab National Bank are the stocks to watch out in the PSU space."