Invest in SBI, Kotak Mahindra Bank: Gaurang Shah

Gaurang Shah of Geojit BNP Paribas Financial Services told CNBC-TV18, "One needs to be stock specific in the entire public sector undertaking (PSU) banks but nevertheless let me say that the initiative that the government has taken is definitely in the right direction but it will take time. The new appointees to translate into positivity's and contribute and improve the state of the balance sheet of some of the PSU banks definitely is going to take the longest time. So out of the two picks, Punjab National Bank (PNB) and State Bank of India (SBI) let me give a disclosure first - SBI definitely you can go ahead and buy, we have a positive coverage. On PNB however, the outlook does not look all that positive.""My advice would be to look at midcap private sector bank which recently got registered for bonus. Kotak Mahindra Bank was in the limelight because of the merger as well and there was some overhang on the balance sheet this time around when the numbers came out of merger with ING Vysya Bank but we believethat the negativity on the downside is extremely priced in now and the stock looks to be extremely positive in terms of investment idea and we believe that the rate cuts would definitely trickle in. That would translate into more positivity's, so you can look at SBI and Kotak Mahindra Bank as an investment idea," he added."On Engineers India (EIL) we do have a positive coverage and I think the only negatives if I can say so is any divestment plan by government of India that could translate into some short-term, medium-term negativity. From hereon, I think you can expect a conservative return of about 10-12 percent. At those levels on the higher side, you can look at switching because you would be better off investing in either IT, private sector banks, pharmaceuticals, oil marketing companies (OMCs), fast moving consumer goods (FMCG) stocks that is where we believe the outlook looks much more positive compared to something like EIL," he said.