Long SBI, Axis Bank in banking space: Chakraborty

SBI, Axis Bank and ICICI Bank are good bets in banking space, says Abhijit Chakraborty, Sr. VP - Institutional Equity, Fortune Equity Brokers.

Chakraborty told CNBC-TV18, “Banking sector has seen a very patchy kind of result so far, there have been some good set of numbers in other PSU Banks, some of the PSU banks have disappointed. I think the overwhelming concern in the banking sector is the CDR (corporate debt restructuring) and which can potentially result into NPAs (Non-performing assets) in the current financial year.”
He further added, “So far in this current fiscal what we have seen is the gross NPAs have been maintained or rather contained by most of the banks but it is not going down well with the investors because there has been a record amount of CDR which has taken place this year and with the fact that interest rates are not meaningfully coming down and corporate sector pain continues to be as it was. There is a fear that several of the CDRs turn into NPAs and not to mention there has been a downgrade of 3 of the largest banks, ICICI Bank included. So that has created a negative sentiment.”
“However having said that I think in this turmoil there are couple of stocks which are looking attractive, SBI definitely being one of them. It is coming out of a long period of underperformance and finally the fear of deterioration in the asset quality seems to be behind us. Marginally there could be improvement on that front. So SBI can do a lot of catch up from here on and same is the case with Axis Bank and ICICI Bank which have seen significant correction but in the numbers the underlying balance sheets are pretty strong. So from a bank perspective these are 3 banks one can look at.”