SBI, BoB and PNB can gain about 10-15%: Hemang Jani, Senior Vice President, Sharekhan

In an interview with ET NOW, Hemang Jani, Senior Vice President, Sharekhan shares his outlook on banking stocks and market trends. Excerpts:

ET Now: Is there merit in buying PSU banks?

Hemang Jani: We think PSU banks as a space has actually been under-owned because the entire focus over the past few years has been on private sector banks. As we all know that because of the much better-than-expected CPI and WPI inflation data, coupled with the fact that commodity prices have cooled off - crude and other commodities - this could actually provide some short-term positive trigger for PSU banks. We think that this could provide a good tactical buying opportunity. So, something like State Bank of India or Bank of Baroda and maybe PNB could provide about 10% to 15% of an upside purely because of this tactical opportunity.

ET Now: What is it that you are recommending in the market right now?

Hemang Jani: Overall, we continue to be positive on the market from a medium to long term perspective. The short term is going to be a bit tricky because of the global events. We think that quarterly numbers are likely to be much better than expected. People are now making out a case for a rate cut over the next two to three months to the tune of 50 bps, thanks to the inflation data.

Therefore, from that perspective, there are three themes that we are trying to play – one, the policy push where we like stocks like L&T, Cummins, Selan Exploration and Gateway Distriparks. Secondly, some of the banking stocks which have corrected in the past 15 to 20 days - ICICI Bank, Axis Bank, HDFC Bank. Apart from these, IT remains the preferred bet because of the Q2 numbers from Infosys. TCS could provide a 10% to 15% upside.

ET Now: The government is expected to hold back GAAR implementation until growth rate is bact to 7%. How important is this development?

Hemang Jani: It clearly a big factor from a foreign flows perspective because at the time of the Budget a lot of people were expressing some displeasure as there was no clear deadline as to when it would be implemented or whether there is going to be a deferment. Now, at least till April 1, 2015, it would not be implemented. So, the uncertainty factor has gone away. This will be an important positive factor from the foreign flows perspective and could be viewed positively for our markets.