PSU banks call for selective play at the moment: Dhiraj Sachdev, HSBC AM India

In a chat with ET Now, Dhiraj Sachdev, Senior VP & Fund Manager-Equities, HSBC AM India, talks about the financials space.

ET Now: What about the financials space? You have not spoken about this segment. How are you positioned there? Is there a balance between PSUs and the private ones, or is it tilt towards the private?

Dhiraj Sachdev: We are still tilted towards the private. We are still not accepting the PSUs fully, owing to the fact that the pressure on the asset quality side is still pretty high.

ET Now: You say you are not accepting it?

Dhiraj Sachdev: They are able to change the course or trend on the NPA side or on lowering their restructured book. The numbers are disappointing to be honest, but the valuations are reasonable.

We do expect that perhaps a couple of quarters down the line the trend on the NPA side will change. We have seen it historically; in the last 15 years this has been the normal course. As the economy picks up, the NPA cycle tends to reduce.

So, we do expect that the valuations are 0.7-0.8 times. We are for having the PSU banks in the portfolio; but one has to be selective, and not very aggressive.