Investors should stay away from public sector banking stocks, Sudip Bandopadhyay, Group Chairman of Inditrade Capital said in a conversation with CNBC-TV18.

He said, "I think there are significant concerns around the entire PSU basket. Very clearly the Punjab National Bank (PNB) fraud has kind of shattered the confidence of the investors. So the entire recapitalisation related positive momentum and positive vibes in the PSU banking space which had been created, has absolutely disappeared. People are worried about the survival and the future of the PSU banking pack."

It is an extremely challenging position for the government as well, he said, adding, "We are not talking about recapitalisation, we are not talking about some amount of money coming here and there, we are talking about fundamental change in the way the banks operate. Unless that is done, I think it is extremely difficult for the confidence of the market to be restored back in the PSU banking space. There may be small trading opportunities here and there based on news flows, but for a fundamental investor, I think PSU banking pack by and large is a complete avoid," Bandopadhyay added.

He further said, "State Bank of India (SBI) is a slightly different animal. I think it is definitely much better managed, governed, and run bank among the PSU banks. If somebody has to take a bet on the PSU banking space, SBI is definitely the only possible buy. At current levels, it has significantly corrected. For a long term investor interested in PSU space, SBI is a good buy at current level."

First Published:Mar 22, 2018 12:09 PM IST