Moneycontrol BureauBrokerage house JP Morgan has a cautious view on Indian banks after a tepid performance by most private sector banks.The brokerage expects the turnaround in the economy to be a slow and protracted process.“The weak economy continues to reflect in corporate asset quality and we donot see an imminent turnaround,” writes JP Morgan analysts Sheshadri K Sen and Dhiren Shah.“Though some positives are coming, through, they do not point to a definitive turnaround before FY18, which is too far out,” says the JP Morgan note.And Sen-Shah duo do not see any major softening in interest rates either.“There is no joy from interest rates either--we think any material down-step in rates is likely in FY18 after the RBI has fully transitioned to a liquidity--neutral environment,” they write.JP Morgan’s top picks are HDFC Bank and IndusInd Bank. It sees value in Axis Bank and ICICI Bank, but expects volatility in these stocks in the next 2-3 quarters. The brokerage is bearish on state-owned banks.
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