Prefer private sector banks over PSU, says Dipan Mehta

Dipan Mehta, Member at BSE & NSE told CNBC-TV18, "The initial results which came from Bank of India (BOI), UCO Bank and some of the other public sector banks did provide a ray of hope that public sector banks could turnaround. They have been massive underperformers and valuation-wise there is absolutely no denying that they are at absolute basement valuations. But then when you look at other PSU bank numbers which came through including State Bank of India (SBI), they were hardly encouraging."

He further added, "Most other banks were grappling with higher non-performing assets (NPA). So although from public sector banks there was some kind of expectation after Bank of Inida results, most of them clearly disappointed and one more quarter investors can do without looking at those companies and avoiding them."

"As far as private sector banks are concerned, all of them came out with very decent set of numbers and they were able to manage the balance sheet well. They were able to manage the crisis, which was there in the banking industry with the forex markets and the debt markets going haywire they were able to manage those challenges pretty well. So within the banks clearly the preference has to be for the private sector banks," Mehta said.