Stay invested in Axis Bank, ICICI Bank and HDFC Bank, says Naresh Kothari, President of Edelweiss Capital. Kothari told CNBC-TV18, "I think about 29% of the banking sector is being owned or was owned by FII’s in September end which is the last data available. If you look at PSU’s not more than 20% can be owned by them, so obviously the private sector banks and obviously because of ICICI Bank and HDFC and Axis which have higher foreign ownership.

The overall ownership was about 29%. Now this has gone up from as low as about 19% - 20% about 3 to 4 years back. So there has been significant ownership of banking stocks, which was one thing and second obviously the macro environment, the headwinds that the whole sector is facing including interest rate increases and an expectation that is the economy is sluggish, will there by an increase in NPA’s over the next couple of quarters.

He further added, "I think all of these combined together clearly makes the case for the sector to have reacted the way it has reacted. Right now at this point of time as some of these things are starting to look attractive, headwinds still there but flight to quality is not a bad idea. I think State Bank below Rs 2,500 looks very interesting, so already 30% off from the top. I think Bank of Baroda looks interesting. In the private sector banks, I think Axis Bank, ICICI Bank every time they correct and come off, HDFC Bank, I think they will be sure shot candidates for people to stay invested in or increase their holdings again."

"Again my view is, you are not in a hurry to go in and buy any of these things because the headwinds are still there. So every time there is a sharp correction is when you want to step in and really pick them up. Otherwise they are drifting down and you can keep on nibbling in but it is about building a portfolio allover again. It’s not about sharp trading moves going in and out."