Prefer private sector banks for long term: Amit Khurana

Amit Khurana of Dolat Capital Market told CNBC-TV18, "Given the valuation discounts in most of the private sector banks, there could be a huge headroom available but I think it has to be seen in the context of the policy measures, which the government recently announced. I think the intent seems to be pretty positive. We definitely believe that there will be a lot of positive newsflow on that part but there is still a long way to go to get these to reflect in the earnings and the way the PSU banks in particular function.""While we were recommending a tactical allocation, there was a quick trade in and out kind of a situation there but from a slightly medium-term perspective the challenges for the PSU banks remain especially on the non-performing asset (NPA) side and the capitalisation is another issue that they will have to sort out. So we are more in the neutral range now versus the concerns that we had earlier and I think we will keep watching out for these two particular parameters to play that cycle," he said."As of now we play for the private sector banks. Notably, private sector banks also have their own challenges while we saw in Q1 earnings but structurally we believe that they are still much better positioned on their distribution reach to the technology spent that they have done and in terms of overall efficiency of the system. So I would still put my long-term money on the private sector banks even now but definitely I see the public sector banks also emerging from a space and you will have to take a stock specific call on that. Probably make some allocations, probably we are approaching that time zone now," he said.Disclosure: Analyst may have personal holdings.