The market fall come as no surprise as it's a lean season, says Sudip Bandyopadhyay, Group Chairman, Inditrade Capital. He remains sceptical about PSU banking space, given that there are many worries lingering still. He spoke to ETNow.
Edited excerpts:
Would you attribute this downtick we are seeing on the Nifty mostly to global factors as opposed to domestic triggers?
Absolutely correct. I think look at the global markets, they have been correcting for the last 7, 10 days. In fact, I was a bit surprised why Indian markets were not correcting and it was very much on the expected lines.
I would not have been actually surprised if it had corrected even earlier. So last two days of fall was pretty much orchestrated by the global markets coming down. It was on the cards, some amount of profit booking, some amount of correction and also remember, this being a very lean season, a lean period for trading as far as the global markets are concerned.
For even Indian markets, there are a very few large investors or buyers hanging in there. So it is a lean period, there was a correction clearly on the horizon and it happened.
Recapitalisation is something that has given a booster shot to the PSU banking index in the week gone by. Do you believe that now is the time perhaps to turn bullish towards PSU banks? Or still one should be in a wait and watch mode, given the fact that there is still those lingering liquidity concerns and there is still the fear of private banks and NBFCs taking away market share from PSUs which has long been the rhetoric?
You are right. This definitely is a positive development as far as the PSU banks are concerned. They needed a further injection of capital and it is happening. I am not sure whether this is adequate enough to restore back these banks to health, but definitely it is a step in the right direction.
But having said that, I do not think I will go out and start recommending my investors to jump into the PSU banking space. There are still many more worries. You talked about liquidity and other things, but the biggest concern is the asset quality and this continues even to date. We have to see the end of the asset quality problems for the PSU banks by and large.
Yes, State Bank probably has seen quite a lot of kitchen sinking, we have seen the same as far as some of the large private sector corporate facing banks. But I am not sure about the entire PSU space. I will be still cautious and predominantly on the back of asset quality issues. This is a step in the right direction, but I will not recommend a buy yet.
From a more longer term perspective, for those equity investors who may be just dipping their feet into the markets, but do not know where to start, what is it that you would recommend in terms of wealth creation idea?
Well, I think there are a few sectors and companies in those sectors which can be looked at. Banking and financial services continue to remain attractive in spite of the headwinds and one bank which recently got created is IDFC First Bank. This merger should do well for the merged entity and at current valuation, I think there is a significant potential for investors to look into that.
I continue to remain bullish on pharma and midcap pharma, there are significant opportunities. Investors can look at Aurobindo Pharma and Natco Pharma. I think with one year plus time horizon, these are great buys.
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