Jaipuria positive on banking stocks

Jyotivardhan Jaipuria, HOR of DSP Merrill Lynch is positive on banking stocks.

Jaipuria told CNBC-TV18, "We have mixed views on banking lot and real estate in a sense we are positive on banks, we are overweight on banks and we are underweight on real estate. The reason we are underweight on real estate is that interest rates has been one problem, which has hit the demand side, but there are couple of other factors to think about in real estate the supply, which is going to come up is very high. At the same time even if interest rates come down there was a lot of speculative demand, which is going to go away. From the company point of view what is happening is lot of them are leveraged, a lot of them need money to be raised so that they can sell-off some of the existing assets, which they are building, which is going to be a problem in today’s environment. So to that extent we think there is still pain left in the real estate sector over the next six-months. I would expect real estate prices to come down per se that would be negative for the stocks in the real estate sector."

He further added, "Banks are interesting because they have come down in valuations, interest rates should come down and the advances are going to be very strong because people are not able to raise money internationally. So they are coming to the Indian banks to raise money and that’s why credit growth will continue to remain very strong. That’s why banks will do well in terms of earnings outlook and we are positive on the banks."

Source: MoneyControl