Stay vigilant while picking banking stocks: Sudip Bandyopadhyay

In an interview with ET Now, market expert Sudip Bandyopadhyay, shares his views on select companies that have come with their quarterly results. The expert also talked about key results that will be watched keenly: Excerpts:

ET Now: The trade is dominated by what is happening to the earnings season. Companies are either getting butchered or they are getting rewarded because of the quarterly performances. What stood out for you?

Sudip Bandyopadhyay: You are absolutely right. A matured market should behave in that fashion only. There is nothing to either worry about it or think about it. There is enough and more liquidity. The steps which are being taken by European Central Bank (ECB) will ensure that there is further liquidity. That liquidity will definitely get attracted towards good markets and good stocks and that is exactly what is happening.

I will also point out that Indian IT companies, by and large, are producing good results. The numbers by Infosys and Wipro were good, but their forecasts were subdued. That is why the market did not react positively. But if you look at the results independently, then the numbers were good. That is also getting reflected in the midcap IT names. Some of the midcap names were turnaround stories. KPIT Technologies is a case in mind.

ET Now: The numbers from two companies Symphony and Federal Bank were in contrast. While, Symphony did extremely well after disappointing in the previous quarter, two Federal Bank has disappointed after all the expectations that built along. What are you views on these stocks?

Sudip Bandyopadhyay: Let me talk about Federal Bank first. I is really unfortunate and nobody had expected the bank to report poor results from Federal Bank. The numbers were predominantly driven by the deterioration in the asset quality and the NPA issues that the bank is suffering from. One can take a lesson here: Stay vigilant while picking up a banking stock.
The asset quality is going to drive the valuations of banking stocks and you cannot make an error there. You have to be very careful about the asset quality. Also, what comes out clearly is the issues pertaining to NPAs are not yet over for banks. We have to keep watching that out.
As far as Symphony is concerned, the results were fantastic. To a great extent, the company is getting aided by the fact that we are having an unusually hot summer. Obviously, that does help Symphony in its sales. It is a great company, it has done very well. It is one of the unique stories as far as India is concerned.