Overweight on private sector banks, caution on PSUs: Vijay

PN Vijay, Portfolio Manager of askpnvijay.com said that they are a bit overweight on private sector banks and very cautious on the PSUs.

Vijay told CNBC-TV18, “If you see the private sector banks whether it is Axis Bank, HDFC Bank or some of the smaller ones like IndusInd Bank or Yes Bank, the earnings have been pretty stellar. Their non-performing assets (NPAs) are under control, their net interest margins (NIMs) are fairly strong. However, the problem for the banks is interest rates.”
He further said, “Operators and punters had built huge positions in banks anticipating much stronger credit policy after the last inflation number, but that didn’t come through. So we are seeing some sort of a sell-off but I won't bid goodbye to banks as yet. Banks have given us good returns in last 12 months especially the private sector banks and I see no reason to change my optimism about private sector banks.”
“Public sector banks is another space, there the problem is their NPAs and their lack of strong growth to compensate for that. With the exception of State Bank of India, one is not sure how the rest of the public sector banks are doing. So we may still continue to see in 2013-14 this differentiated approach to banks. We have been a bit overweight on private sector banks and being very cautious on the PSUs,” Vijay added.