Avoid banking space for now: Emkay Global Financial Services

In a chat with ET Now, Anish Damania, Head-Institutional Equity, Emkay Global Financial Services Ltd, shares his views on banking stocks.

ET Now: What is your call on the banking space?

Anish Damania: If you look at this is a first rally where the banking sector has underperformed the broad index Nifty. It is for the first time when this desk has shown about a 6% underperformance to the Nifty, where the Nifty has gone up by about 12% odd in the last few days. So if I were to look at it the market is sort of looking at this fact that these things will keep on happening as the economy deteriorates and as the slowdown continues to gain momentum. Also, as the policy paralysis as we have been seeing for the last several months continues its momentum again. So we are seeing that the NPA cycle is not peaking out, it is yet to peak out, we have just put out a report where we are seeing that NPA cycle will take at least another year for it to peak out. So if either any bank has started with the public sectors banks now it is spreading to the private sector banks. I would not be surprised to see companies come forward and say that okay the NPA situation is looking much grimmer over the next few quarters.