Rate hike will not have a negative impact on banks: Ashish Kapur

ET Now spoke to Ashish Kapur, CEO, Invest Shoppe India Ltd, on his views on the market.

ET Now: How would you react to rate hikes and the net impact on banks?

Ashish Kapur: I think the rate hike was more or less expected and factored in. Generally everybody was expecting a rate hike before the policy announcement and may be a further 25 basis points hike during the policy announcement is also not ruled out.

Most of it has already factored in. Even today we have really not seen too much of negative reaction from the banks. So I think that has factored in and also my own opinion is that within banking, one should prefer both the public as well as the private sector banks.

There are lot of things happening. Many of the banks are likely to see a lot of mergers, lot of possible alliances and also with the economies the way it is, I think credit offtake should help banks improve their volumes.

The rate hike does not in my opinion impact the margin in a significant way because they will be able to pass on the rise in the deposit rates to the borrowers. So I am quite positive on the banks. Yes, its good to be stock specific within the banking sector but there are plenty of good investment ideas both in the public sector as well as private sector space. So I am bullish I think the weight of the banking sector in any investor's portfolio should gradually move up.