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I would go overweight on sectors where earnings growth is higher, Sanjay Dongre, EVP and senior fund 67090632

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manager, UTI AMC, tells ET Now. Earnings growth could be in excess of 15% in domestic cyclicals over the next 18-24 months time, says Dongre.Edited excerpts: What is your perspective on the whole financial space, especially with regards to NBFCs and PSU banks?Most of the NBFCs are operating at a negative ALM mismatch and therefore they borrow short term and lend long term and as and when there are liquidity shocks in the system, these guys tend to suffer or come under pressure. Therefore, in the current scenario, availability of liquidity to every other NBFC would be difficult. It would be available to a very few NBFCs. Again, this year because of the liquidity constrained environment, the cost of funds available for the NBFC sector is going to be higher. On the other hand, there is a big question mark on whether they will be in a position to pass on this increase in cost of funds to borrowers. Even the banking sector would be operating in some of the segments where the NBFCs have a higher market share and therefore you could see the spreads for most of the NBFCs coming under pressure. As far as PSU banks are concerned, if you look at the history of last 20-25 years, what you would find is that mostly there have been tactical trades in the market in the sense that whenever these stocks fall to 0.4, 0.5, 0.6 price to book, one can buy these stocks and when the stocks go to 0.8, 0.9 times book value or one time book value, one needs to sell these stocks. So, there have been tactical trades because in the last 20-25 years, during the ups and downs in interest rate cycle, it is the private sector banks which have withstood it lot better than the public sector banks. In that sense, public sector banks will always be a tactical trade and might not be a core part of your portfolio.What is one supposed to look at in a market like this which is full of uncertainties, especially on the macro and global fronts, Which are the spaces one can look at if not a financial name because that seems to be under pressure even in the medium term according to you?We talked about NBFCs and PSU banks, but I am pretty positive on the private sector banks and within that, the corporate-oriented private sector banks. In last three years, corporate-oriented private sector banks have been impacted mainly by higher credit cost because of the asset quality issues they have been facing. But now they are more towards the end of that asset-stress recognition cycle. In the last two, three quarters, you will find slippages are coming down and one can expect the credit cost for these corporate oriented private sector banks to come down in FY20 and that should give a good fillip to their earnings and therefore they should commanding a better multiple in the market place. I would be more inclined to go overweight on the domestic cyclical sectors because these are the sectors where earnings growth could be in excess of 15% over the next 18-24 months time compared to the global sectors.Today when you look at the market from the valuation perspective, they are quoting at about 17 times on a 12 months forward multiple against a historical averages of 15.5 to 16 times. So, earnings delivery is a lot more important at this juncture for the market to sustain this current level. Wherever the probability of earnings growth is higher, those are the sectors where I would like to go overweight.