Expect time correction in banking and NBFC stocks in the near term: Taher Badshah

In a chat with ET Now, Taher Badshah, Senior Vice President & Co-Head Equities, Motilal Oswal Asset Management Co Ltd shares his views on the banking and financial stocks.

ET Now: Most PSU banks from recent lows are up by more than 40-50%. In the short term, is this as good as it gets for banks?

Taher Badshah: In the context of the sharp rally, quite a lot of the under pricing in many of the stocks have actually been absorbed by the market. To that extent, there is a time for a breather in these stocks.

Although I am not really significantly worried about bond yields at this stage, even though the short term yields have spiked because of a few reasons. I do not think we are headed for high yields.

It will probably be the other way round, especially at least over a six to 12-month horizon as we keep seeing inflation soften.

In the near term, there seems to be relatively less on the table and we need to probably wait for the earnings season to come up. This sector again is a good case for a time correction.

ET Now: The pack of financials did not bag a banking license. Does the pounding and thrashing of the stocks like L&T Finance, Reliance Capital and Shriram Transport look fair in yesterday's trading session?

Taher Badshah: Not having the banking license for some of these stocks might allow them to show better financial performance at least over the medium term.

The banking business would have led to a certain amount of impact on their core business, overall earnings and return ratios. The stocks that have moved up in anticipation of a banking license and got a banking license should probably correct.

The ones that have already corrected on the back of not having a banking license should be used to buy into, especially if you were to like any of the names out of those banks.