Private banks better bet in banking space: Mayuresh Joshi, Angel Broking

In an interview with ET Now, Mayuresh Joshi, VP, Institution, Angel Broking, speaks about the market. Excerpts:

ET Now: What is explaining this outperformance that we have got in the broader markets while the Nifty is in an absolute cool-off zone?

Mayuresh Joshi: It is more stock-specific and a bottom-up approach that you are seeing in the markets. Midcap and small cap stocks were beaten down to a great extent over the past few quarters for various concerns that were best known to the markets. In terms of valuations as well, on all parameters, most of the stocks in the universe had got beaten down.

So in my opinion, there is some amount of renewed buying interest coming into these stocks purely from a valuation perspective and a long-term perspective. More or less, the Nifty should stay in a range whereas we will see stock-specific action happening both on the small and the midcap side of the index.

ET Now: How should investors play banking stocks in the near term?

Mayuresh Joshi: Larger private sector banks are looking like a better spot to play within the banking space, which is more or less to do with the CASA accretion, credit quality and the kind of credit growth. Obviously on their balance sheets, they are well-capitalised.

So in terms of balance sheet expansion and credit growth, the private sector banks are placed in a sweeter spot compared to their peers in the public sector side. So in our opinion, Axis Bank and ICICI Bank on declines look very attractive from a two to three-year horizon.

They can have good amount of growth not only on the fee income side, but also on the non-fee income side.