Banks well prepared to handle any heightened risk, says Macquarie Capital

According to him, large banks and top non-banking financial companies (NBFCs) are very strongly capitalised. “From a two-three year perspective to begin with, at least the large quality private sector banks, even State Bank of India (SBI) for that matter and some of the top NBFCs are very well capitalised and also at the same time they have strong pre-provision operating profitability to provide for some of these bad assets which could come even if there is a second lockdown,” he said.

“If you lockdown the economy for three-four months and suddenly open it up in September, it is pretty obvious that those who have taken moratorium for six months have some savings. So they might have gone ahead and paid the September or October month EMI but we need to see whether these numbers are sustainable,” he said.

SBI looks extremely cheap and more than adequately factors a reasonable amount of stress, he believes. “The stock is extremely attractively priced because of very good valuation that you are seeing for the subsidiaries getting built into,” he said.

From a five-ten year perspective, insurance sector is a very attractive place, he believes.