FUND VIEW-Lotus bets on Indian banks

By Nishant Kumar

MUMBAI (Reuters) - Indian bank stocks, weakened by high inflation, are an attractive bet at current levels as a wobbling global economy eases commodity prices, moderating price pressures, a fund strategist said on Thursday.

The property market, however, is unlikely to benefit from lower rates as current prices are unrealistic, and investors should avoid investing into them, said Tridib Pathak, chief investment officer at Lotus India Asset Management.

Pathak, who overseas 9.5 billion rupees (12 billion pounds) at the Indian fund venture of Singapore's state investor Temasek Holdings, parked about a fourth of Lotus Equity Fund's assets in banks at July-end and has dumped entire real estate holdings this year.

"We are extremely bullish on banking as a sector," said Pathak, who has added ICICI Bank (ICBK.BO) and Corporation Bank (CRBK.BO) in the equity this year and also had Federal Bank (FED.BO) as its top holding at the end of July.

He said easing commodity prices and sharp drop in valuations this year made a sound investment case for the banking sector which has maintained a net interest margin of about 3 percent in the last 15 years irrespective of interest rate movements.

India's bank stocks .BSEBANK have plunged more than a third this year, steeper than near 26 percent fall in the benchmark index , after double digit inflation led to tighter monetary actions by the central bank.

Pathak, whose firm launched a banking sector fund in May, said a slowing global economy would weaken commodities demand, giving India a respite from inflation and high interest rates.

Data from the euro zone on Wednesday which showed the first ever contraction in April-June, suggests concerns that earlier centred around the U.S. may be spreading to other regions.