Avoid private sector banks; go for top quality midcap companies: Vijai Mantri

In a chat with ET Now, Vijai Mantri, MD & CEO, Pramerica Mutual Fund shares his views on the public sector banks, capital goods sector and top quality midcap companies.

ET Now: Would you recommend buy on dips for the private banking lot?

Vijai Mantri: Ultimately, the disease will spread to the private sector banks as well. From last quarter, the top quality private sector banks are seeing some struggle on the corporate and smaller size loans.

The general tight liquidity in the market is impacting everybody. The working capital cycles are getting elongated. The private sector banks do not remain the safe haven. However, the liquidity coming from the global market is keeping them afloat.

We see biggest opportunity in Indian market in the midcap segment. The midcap top quality companies with more than 20 year of track record are available at their multiyear low. Over a period of time, the smart money will start moving into the midcap.

From opportunities perspective, instead of taking a sectoral call, big amount of money can be made in the midcap stocks. They are expected to get priced in over a period of time.

ET Now: What to your mind is happening with the entire capital good/power space?

Vijai Mantri: This might be technical because a lot of people have gone short on those stocks, thinking these stocks are available at their historical low valuation.

If you are running an open ended portfolio, your performance is just against the benchmark. So, when your stock is not doing well and goes down by 10-20%, you tend to sell those stocks even when they look very attractive.

There are a lot of short selling happening on those stocks, which is why they have bounced back. However, this quarter numbers for these stocks may not look very good because we do not see any visibility on the revenue growth of many companies on the capital good sector right now.