Avoid bank stocks: Prateek Agarwal, ASK Investment Managers

Prateek Agarwal, CIO, ASK Investment Managers, in a chat with ET Now, speaks on investing


What could be the top trade for 2012, hide in defensives or time to open up, time to load up banks and metals?

It really depends from what price we are looking at. Metals would tend to benefit from rupee depreciation once the global commodity prices themselves stabilise. Till date the drop in let’s say something like an aluminium is very similar to a drop in rupee and hence aluminium companies have not benefited from the margin. But yes, companies are trading close to book value, so if they drop below that, then that can be an attractive part of the market as well. Banks, we really believe over the next 4-5 months will see extreme amount of stress.

At the end of the day the businesses to whom banks have lent are not able to sustain a 12-13% kind of interest rates and hence the bottom line is the banks will not end up getting a 12% or a 13% yield from those kind of businesses, so either the interest rates goes down in a hurry and the assets do not become bad or the assets will become bad and then they will have to restructure it and then get the same 8-9% kind of a yield from those kind of assets. Banks face a pretty challenging time over the next 4-5 months, so our call will not be banks at this point in time.