Market rally in next phase could be led by banking: Taher Badshah, Motilal Oswal AMC

In a chat with ET Now, Taher Badshah, Senior Vice President & Co-Head Equities at Motilal Oswal Asset Management Co Ltd, shares his thoughts on PSU banks. Excerpts:

ET Now: What is your sense on PSU banks? The voices on bank recapitalisation is only getting louder, now with the Finance Secretary too saying the same.

Taher Badshah: From a fundamental standpoint, if we look at the impending results season, then things will probably get a bit better in terms of prepositioning profits on a year on year basis. It may not be very different on a quarter on quarter basis, but you will probably see a good improvement in terms of the operating numbers for both public sector banks as well as private sector banks. For the public sector, we will probably see a steady environment as far as NPAs go compared to the previous quarter.

Hence, fundamentally it is looking at the margin to get better, but I am not sure as to how the stated objective of capitalising banks through sale of securities in the retail market is going to be viable and whether it is going to be sufficient for the kind of money that needs to be raised for some of these banks.

Thus, from a technical standpoint, I find it challenging for the stocks as such. But fundamentally, things should get better. Moreover, we have seen a good correction in some of the large cap PSU banks and even more so in the midsized ones. Hence, they are once again getting a little more comfortable from the point of view of valuations after this correction. The market rally in the next phase once again could be led by banking.


ET Now: What about private banking names? What is it that you are liking there?

Taher Badshah: At least as far as our portfolios go, in the mutual fund side, we are positioned on banks like HDFC Bank, Kotak Bank and some of the non-banking financial service companies. This is how we are basically playing the financial services sector.