BNP Paribas will continue to focus on frontline banking stocks, Manishi Raychaudhuri, Asian equity strategist, equity cash Asia Pacific, told CNBC-TV18.

“I would still stick to the largecap frontline private sector banks because they have demonstrated their ability to gain market share and have a better asset quality, both in corporate lending and retail lending compared to their public sector counterparts and non-banking financial companies (NBFCs),” he said.

“The area that I would be slightly concerned about at this point of time are some of the pure retail lending NBFCs,” said Raychaudhuri.

When asked about his picks in the Indian markets, whether he would have an economy-facing or defensive strategy, he said “We have feet in two boat kind of strategy.” He further explained, “Possibly, it’s a value which offers more opportunities now, simply because the difference in valuation and the difference in ownership from institutions and retail’s perspective had become too large a gap between growth and value. Some of the classic value plays like the public sector banks are also starting to do well even though they may lose market share in the long-term, but it seems in the medium term, they have built a significant credit cost buffer. That could potentially lead to an earnings growth story over the next couple of years.”

On equity markets, he said, “We think regional markets including India will continue to remain strong for a while. It is clear from various central banks’ pronouncements over the past few days that they are not likely to step away from this accelerator on easy monetary policy and quantitative expansion that they are doing.”

For the entire interview, watch the video.

(Edited by : Dipika Ghosh)