Avoid large caps in banking space: Gautam Shah

ET Now spoke to Gautam Shah, CMT and Vice President, Financial Services, JM Financial, on his views on the market.

ET Now: Do you still have a bearish stance on the banking sector?

Gautam Shah: After the recent rally and the fact that you are trading at 52-week high, there are a lot of sectors that have turned overbought at this point of time. Banking has been one of the star performers in the last few weeks and after the rally the sector has seen in the last couple of days, the Bank Nifty is above 10000, trading around that level. It is a bit overbought.

So from a risk reward angle, it does not make sense to enter the large cap banking stocks but if you have to look at the smaller PSU bank stocks, the midcaps and the small caps in this space, that is where there is a lot of money to be made over the next 6 to 12 months. A lot of stocks in that segment are forming lovely basing formations that could lead to super normal upside over the next 6 months. So large cap would be an avoid and midcaps would be a buy.