Prefer private sector banks: Gaurav Doshi

Prefer private sector banks with a bias towards retail lenders, says Gaurav Doshi, VP - PMS, Morgan Stanley PWM.

Doshi told CNBC-TV18, "In January we talked about the fact that the Bank Nifty had massively outperformed the Nifty by over 50-60 percent in the last two years and we had actually taken some money aggressively off the table on a banking exposure. That trade works well and we are simply revisiting that thesis that is it a time to revisit banking and in which segments.”
He further added, “One question that definitely answers that even if we were to revisit banking our priority will continue to be the private sector banks with a bias towards retail lenders. The second preference will be Non-Banking Financial Banking Companies (NBFCs) primarily targeting the retail customer and the third and the last option is PSU Banks for us because we still think incrementally slippages may continue over there.”
”Therefore while we continue to refer the private sector banks and they have also corrected, the question we are asking ourselves is that may be there is another 5-7 percent downside before one should aggressively be chasing banks because we are not convinced that the sheer outperformance of the Bank Nifty through this one correction has corrected itself. We think may be a little bit of consolidation or correction would provide a great entry opportunity into banking.”
”Last with regards to the PSU banks there is just one thing that we are looking out over the next one-two months we want to see how food inflation plays out. However, any sort of trend emerging there, which will make us believe that the RBI could probably turn more comfortable in terms of its rate cutting strategy, then it would make sense to then look to add some risk in financials and move down the curve and look at the PSU space. Until that clarity doesn’t emerge for now we are happy to play the big large cap private sector banks.”