Gaurav Doshi`s view on banking space

Gaurav Doshi, VP - PMS, Morgan Stanley shares his view on banking space.

Doshi told CNBC-TV18, “In banking the clear preference is the private sector banks with a high CASA (current and savings account) deposit and extremely niche NBFCs (Non-Banking Financial Banking Companies) that pretty much are catering to the personal loan and two-wheeler and utility loan segment. But these are the two segments that under the current circumstances one can back with money enlarge allocations. Though while we feel banking is something that one must have meaningful exposure to, we are still not okay with the fact that we are not convinced that of the asset quality issues with the PSU banks and in the private sector space I think one has to be a little selective. So the preference is for banks with high CASA deposits.” He further added, “Its clearly these two pockets of private sector banks along with few NBFCs that have delivered earnings growth over the last 2-3 years irrespective of what the broader market is doing because of the sheer underlying trends in our economy and those are the bets at least under the current environment that we think you should be backing.” “Talking about interest rate the sector is obviously consumer discretionary and capital goods would be proxies to look at when you believe that this interest rate cycle is peaking. But the question is that when will we get the next rate cut? The way the situation looks right now I think rate cut could be in the later half, could be back ended and we may not see any interest rate based triggers for the next 1-2 quarters. So therefore rushing into a consumer discretionary or a cap good trade as a proxy on interest rates would not be the right strategy. If anything just chase banks right now and wait for more clarity to emerge with inflations and RBI stance to chase the broader interest rate sensitive’s, may be even a real estate at some point in time but we’d need a lot more clarity for that to emerge.” Disclosure: My firm, clients and I may have holding in the stocks or sectors discussed.