Wait before taking aggressive stance on PSBs: Sandeep Tandon

In a chat with ET Now, Sandeep Tandon, MD & CEO, Quant Broking shares his views on the banking and capital goods spaces. Excerpts:

ET Now: What about banks as well as capital goods because of late, we have been seeing a tectonic shift coming and money pouring into banks as well as capital goods and moving out of FMCGs as well as some of the IT and pharma names?

Sandeep Tandon: That is true, in fact the last time also we discussed that in the third quarter, you will see FMCGs under pressure because it is not about big time correction we are looking at. We are looking at small consolidation. Now for the last two months, we have been talking about a more diversified strategy and that is the reason for money shifting from these defensive names to some of the high beta names particularly capital goods.

As far as banking is concerned, we still like private sector banks because most of the parameters for the public sector stocks have not changed to that extent. In fact we will be looking for data points for the next four-five days and how trading shifts up. It is on the verge of a breakout. If we see momentum building up in the public sector banks also, then obviously you will get the required boost for the Nifty, given the high weightage banking has, but as of now, we will still stick with the quality some of the private sector banks like Axis Bank or ICICI Bank.

However from a valuation perspective, PSU banks are trading at significantly low book value levels and we think these stocks have bottomed out. There can be some amount of bottom fishing, but I would like to wait before taking a very aggressive stance on PSU banks.