Overweight on PSU banks, like private banks more: S Naren

In a chat with ET Now, S Naren, CIO of ICICI Prudential AMC, shares his views on the banking space.

ET Now: Is there a specific reason why you are going easy on PSU banks?

S Naren: We were underweight on PSU banks for may be four years and in the last six months. But now we have moved to an overweight stance. However, we like private banks more because they have participated less in the last six months and because most of them are FII restricted today.

Thus, that has also affected their rallies in some of the cases. Hence, we find an attractive contrarian opportunity to buy long term in banks which are having FII restriction.

ET Now: Why are you extremely bullish on SBI and L&T even now?

S Naren: We believe in cycles and we had a strong consumption cycle between 2007 and 2012. Along with that, there was a strong real estate and gold cycle. Hence, between 2012 and 2017, there is going to be a financial saving cycle and an infrastructure cycle that has to be more of a manufacturing cycle.

On that basis, we are clearly believing in both financials and infrastructure as a theme for the next three years. If I take the last one month into account, another sector which has not done well is financials, and therefore the opportunity is even more there.

We did push at least small cap and midcap in the post election period as themes to look at and that played out in the last one month. But banking has not played out. So possibly, the opportunity at this point of time is in banking.