Radical changes happening in the banking system: Sanjay Dutt, Quantum Securities

Investors should now start looking at key PSU banks that have the potential to grow really big, said Sanjay Dutt, director, Quantum Securities.

"So the steps taken by the government with regards to PSU banks are more short-term steps but fundamentals changes like the way PSUs lend...there are radical changes happening in the banking system," he said in an interview with CNBC-TV18.

Dutt is of the view that what we are seeing in the market currently is a rebound from an extreme oversold condition, especially in mid and small-cap space.

He said financial space is the fundamental engine of our economy and if that is not geared up, we will not be able to withstand the shocks.

On metal space, he said, "It is a good value because the entire commodity equation is basically around China since it is the biggest producer, consumer, exporter, etc., and if they are trying to reflate its economy there is no reason why metals will not have a positive bias in next few months. So the sector will start to look up in the coming months."

"Markets tend to move ahead of the economy. Markets have understood and built in most of the negatives now, so would be more aggressive on some of the non-defensive plays than pure IT and pharma," he added.