Upside for banks is capped: Anand Tandon

In a chat with ET Now, Anand Tandon, CEO, JRG Securities shares his views on banking sector.

ET Now: Do you think in the near term, things are looking slightly sticky for financials as a group and markets should not focus on RBI action, in fact banking sector should worry about NPAs and slowdown in credit growth?

Anand Tandon: We have seen figures of credit growth going up in the recent one month or so but that is not necessarily a positive.

Credit growth by itself is not necessarily an indicator that the economy is reviving. On the other hand, there is still a fear that the quality of assets will continue to deteriorate at least till the market revives and therefore the NPA cycle has not necessarily peaked out just yet.

Banks are anyway in most portfolios and though that we have seen some correction there continues to remain the most dominant sector. So the upside from here to my mind is somewhat limited.

The downside can be fairly serious especially for those companies which have too much of consumer exposure.