Nandita Parker positive on banking sector

Nandita Parker, Managing Partner at Karma Capital told CNBC-TV18, "We have been invested in private sector banks in the past couple of years. In fact in the last decline of August we did pick up a couple of public sector banks because we thought that the valuations were compelling. We think that the kind of valuations that we saw, we are looking at 0.3-0.4 times price to book will not be seen again and these are typically sort of pricing in crisis and eternal amount of stress in the economy which obviously doesn’t work."

He further added, "So even now when we look at public sector banks, we think that if you look at the quality managements, if you look at the quality of the books and the robustness of the lending practices and if you do a little bit more work, you look at the strength of the retail franchises, you will still come up with a lot more picks on the public sector side." "I sense that there is a shift in the overall feeling vis-à-vis the economy and vis-à-vis the banking sector that probably the worst is behind us or it cannot get any worse than that. As you see new banking licenses being issued, as you see a regime change post the elections, we are looking for a little bit more vibrancy on the economic front. You are seeing a lot of the promoters also trying to deleverage their balance sheets by doing asset sales," Parker said. He further said, "So a lot of the non-performing loans (NPL) problems also will get sorted out and at the end of the day banks are a leverage play on the economy. So I think that since I am positive on the economy for the next year, I am positive on the banking sector and this will give us a fair amount of returns here."