Adjusted gross revenue (AGR) dues overhang likely to be the end of pain for banks, said Gopal Agrawal, senior VP & head of macro strategy at DSP Investment Managers.

Agrawal told CNBC-TV18 telecom companies are going to perform better because the sector has already passed through the worst of the NPA issues and there is no possibility of adding chunky non-performing assets (NPAs) any further.

Agrawal said, “The worst is behind and with improvements in ARPU going ahead, I feel still there is an upside in the sector. Only thing we have to see whether it will end up with 2 or 3 player market which will decide on how this sector will create wealth.”

On largecaps, Agrawal added, “We feel the worst, especially for the midcap, is certainly behind because in the last 18-24 months credit related events like credit unavailability, widening of spread between AA and AAA, NBFC issues and US-China trade war related issues -- most of the things are turning behind.”

“Now the banking system is surplus with liquidity, credit spreads started to narrow, the government is helping MSME to get some credit access and a rally is seen in both agri and non-agri commodity prices."

The valuation difference between largecaps and midcaps has widen to 35 percent, which is historical high, therefore, midcap stocks will perform better going forward , he added.

First Published:Jan 17, 2020 11:45 AM IST