Underweight on banking stocks: Manish Kumar

Manish Kumar, Investment Head, ICICI Prudential Life Insurance in an interview with ET Now talks about banking stocks.

You are overweight on banks. What's your view on banking stocks from these levels because the environment for banking stocks is very challenging?

Probably you are looking at a slightly dated portfolio. Historically while we have been overweight on the banking sector, in the last six months or so, we have cut our exposure to the sector. Currently we are underweight on this sector and more so underweight on the public sector banks as a space while having sort of neutralist stance on the private sector banks.

Somewhere that is in sync with our call that going forward in the current year, we are going to see pressures on two counts. One is we have seen significant hardening of the deposit rates and that is going to have a bearing on margins or on growth if banks try to protect their margins.

Secondly the market is pricing that asset quality, headwinds are behind us but looking at the weakness in some of these sectors. We believe that asset quality headwinds may actually continue for some of the banks as has been vindicated in the results that have come for the March quarter.