Q4 likely to be a mixed quarter for corporate banks, says Vaibhav Sanghavi of Avendus

Talking about the corporate banking space, Sanghavi said, “It would be a mixed quarter for them because we do not know which one would be in for kitchen sinking because of the new management, but that would temporarily one-quarter phenomenon.”

“I do expect, given the last 3 or 4 years where we have seen massive cleanups, it may be just an aberration of one quarter and we are very constructive on corporate banks on a longer-term basis,” he said.

On the auto sector front, Sanghavi said, “We did an interesting analysis on the pre-election and post-election period of 6 months and we tried and mapped auto sales numbers. We have always found that there is generally a good recovery post-election period.”

“Having said that this time it’s a combination of liquidity tightness as well into the system which aided this whole kind of weaker auto sales numbers. Once the numbers are so low definitely the operating leverage kicks off on the negative side as well. So you might see some amount of margin pressure coming on to the whole pack and because of which the numbers maybe slightly weak, but given that the interest rates are coming down, liquidity is getting back into the place, post couple of months we might be constructive on this space,” Sanghavi added.