Banking stocks could see an uptick in medium term: Jitendra Sriram

In a chat with ET Now, Jitendra Sriram, Director & Head of Research, HSBC Securities, shares his views on banking stocks.

ET Now: What is your take on banks because for the moment, private banks are taking it easy, PSU banks is where all the action is?

Jitendra Sriram: There is an expectation that this government will be able to push through a lot of the stalled projects. So, there is hope that some of the sticky assets residing on the banks portfolio, so-called toxic assets, could see improvements come through over a period of time.

The return on assets for this entire segment has been way too low and probably there is a chance that over the medium-term perspective say over 18 to 24 months, you could see some uptick.

This will be an era of fiscal consolidation because BJP clearly wants to play a longer duration game rather than do like a one term tenor of 1999 to 2004, and if that be the case, they need to get the fiscal repair underway in initial years to make sure that they have enough way to spend their way to get the economy going on a good track towards the latter half of their tenor.

So year one, could well be a situation of reasonable tightness in fiscal policy as they try to improve public finances and at the same time, you could see an overlay of continuing tight monetary policy because in a scenario of El Nino and the backdrop of such events, it is going to be very constraining for RBI to cut policy rates.