Tightening of the liquidity cycle can augur well for banks: Paras Adenwala
In an interview with ET Now, Paras Adenwala said that the tightening of the monetary policy by the RBI can work for the advantage of banks.
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| ET Now caught up with Paras Adenwala, MD & Principal Portfolio Manager, Capital Portfolio Advisors, to get his views on the fall in the Nifty and the stocks in the banking sector
A fall in the Nifty is pretty much in expected lines. Do you think it will perhaps worsen as we go through the session?
No. It’s absolutely on expected lines and my sense is the faster it falls, the more close you are to stability, and therefore, we need to be done with it as soon as possible. So, I would not be too unhappy about the fall. If it keeps on falling like this, probably we should see stability returning as soon as possible and you should keep your shopping list ready and start buying the moment you see a price levels being breached.
Banking is seeing a bit of a downtick. There is the bank Nifty which changes the weightages as well, but in light of the budget and the bank Nifty changing weightages, would you look at any of the banks at lower levels?
Absolutely, I think there has been a bit of a negative sentiment towards a sector, especially in the last one month due to fears of tightening of the liquidity cycle and reverse of the interest rate scenario. But my sense is that tightening of liquidity probably will augur well for the banks because in any case they have been getting suboptimal returns on unlent funds that they have been having which they have been investing with RBI or with mutual funds.
A fall in the Nifty is pretty much in expected lines. Do you think it will perhaps worsen as we go through the session?
No. It’s absolutely on expected lines and my sense is the faster it falls, the more close you are to stability, and therefore, we need to be done with it as soon as possible. So, I would not be too unhappy about the fall. If it keeps on falling like this, probably we should see stability returning as soon as possible and you should keep your shopping list ready and start buying the moment you see a price levels being breached.
Banking is seeing a bit of a downtick. There is the bank Nifty which changes the weightages as well, but in light of the budget and the bank Nifty changing weightages, would you look at any of the banks at lower levels?
Absolutely, I think there has been a bit of a negative sentiment towards a sector, especially in the last one month due to fears of tightening of the liquidity cycle and reverse of the interest rate scenario. But my sense is that tightening of liquidity probably will augur well for the banks because in any case they have been getting suboptimal returns on unlent funds that they have been having which they have been investing with RBI or with mutual funds.
So, a part of that liquidity now has been sucked out. Even in the event of an increase in interest rate scenario, we should see an impact in the very short term, but over the long term, I see credit growth picking up and that should really improve the profitability. There are several banks which are available at absolutely attractive valuations now I would start buying into them the moment I see them hitting my price levels.
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