Aditya Narain neutral on banking sector

Aditya Narain, MD & India Strategist of Citi told CNBC-TV18, "In some senses our overall stance on the banking sector is a neutral one. In many senses, this is the one sector where there is huge disconnect in the market. There are those who are reasonably positive and there are those that are reasonably bearish and in some sense, we are trending down the middle. I think loan growth is going to moderate. I think pricing in that context is going to be a little bit of a challenge and there will always be question marks on the asset quality cycle. So in some sense, one does have these slight overhangs."

"On the flip side, one must remember that India's slowdown now has been reasonably there for a while. The asset crunch has been going on for a while. So it is also a sector where one will start looking towards the end of the tunnel. In that sense, we generally tend to play it down the middle. In terms of whether it is a private banks or the public banks, in some senses, I think the public sector banks might offer more of an opportunity. They are beaten down, any good news or any form can give a 10-20 percent as far as those stocks are concerned but on a more consistent basis, I think the value will effectively lie and the opportunity will lie with the private banks because of loan growth," he said. "I think their ability to capture it better is materially stronger. I think they have kept out the asset quality cycle largely and I think their ability to manage it is also better. Finally, in terms of pricing, they end up doing a better job from a pricing perspective. So in some sense, this is a phase of the market where one might get great opportunities to buy some of these banks at reasonable valuations. I think the framework is shifting down a bit for the valuations." Also Read: SBI lags in business, profits per employee: RBI report