Banking sector looks good: Tulsian

Investment Advisor, SP Tulsian is of the view that overall prospects for the banking sector looks quite good from hereon.

Tulsian told CNBC-TV18, "If you take the liquidity scenario, I think it has eased out that is the reason you have seen the call rates also dropping from about 20% to now about 7-8%. Definitely there won’t be any problem or fear for the large corporate or the rated securities which are highly rated one and they can definitely able to avail but problem will continue to remain maybe for the rate sensitive sectors like automobiles or housing or even the SMEs because it will be difficult, bank will be a bit cautious. Right now they have been putting their house in order in respect to the overdrawn amount which they have been operating all along. All these rate cuts will give them relief to adjust or to settle that."

He further added, "Coming on the policy front, I do not think RBI will really be able to go or slash further in the CRR. The prospects or the possibility of reduction remains in SLR, remains in repo rate but I do not think that will really happen for CRR. But if I take an overall scenario the kind of credit squeeze and all that and the rate cut which is inevitable for banks for both deposit as well as for lending all makes good way for them to have the credit growth beyond the expected maybe 15-18% which was earlier thought of. Now they will be able to do it or maybe able to do better so overall prospects for the banking sector looks quite good from hereon."

Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.

Source: Moneycontrol