Banking stocks will take a backseat for sometime: Sanjay Sinha, L&T Mutual Fund

Sanjay Sinha, CEO, L&T Mutual Fund, in a chat with ET Now talks about the the banking sector.

From the banking lot, what would you prefer in the coming year - the private banks or the public banks?

There is scope in both of them. I think the handicap that this sector stocks are today dealing with is that may be all the expectations of the valuation was already factored in and we saw the stocks run up quite strongly. In a market you can never have a absolute perfect price discovery. We always tend to either over correct on the side of bullishness or bearishness.

Going by the earnings traction that you have seen in the banking stocks, the fact that they have been one of the better performing sectors is not surprising but the issue is that it is already priced in. So for sometime, the sector will take a backseat in terms of outperforming the market. At best, it can be a market performer but once we again have the earnings traction getting factored into their valuation - probably in their price to book value ratios - this sector will once again come back to be one of the core participants of the markets but that may be a couple of months away.