PNB, Bank of India and Bank of Baroda to lead PSB rally: Harendra Kumar

In a chat with ET Now, Harendra Kumar, Managing Director-Institutional Equities, Elara Capital shares his views on the PSU banking pack. Excerpts:

ET Now: You talked about as to how you feel that the rally is going to first start with the PSU banking cluster. What names are you bullish on there, because again there is a wide variety of names over there?

Harendra Kumar: The rally would start off with stocks like BOI, BOB and PNB, which will clearly look to continue their upmove from where they started off, but in terms of absolute cherry-picking, the absolute valuation of say, Oriental Bank of Commerce is extremely low, though it has NPA issues etc. But investors are looking at a three-year view from hereon, rather than trying figure out what the past has been. So these are interesting times for some of these beaten down stocks.

One argument that has come up is that some of the bank valuations are closer to those at the time of the Lehman crisis of 2008 and the question is if the world is a better or worse place today. I am sure it is a better place and that is clearly what investors are looking at. So their outlook is pegged for the next three years and not in the immediate and that is how they are looking at some of the stocks.