Take the case of Tata Steel. A blue chip company with manufacturing facilities across the globe, the company has a book value of Rs 568 and the stock price is quoting at just Rs 218. The price to book is just 0.38 times.

It's the same story one of the big global players in the aluminium and copper space - Hindalco. The stock is quoting at Rs 90, while the book value is Rs 164.

The case with the PSU banking sector is the same. All of the PSU banking stocks are quoting way below book values and with price to earnings multiples like 3, 4, 5 and 6 times.

No doubt there are worries associated with the asset quality of PSU banks, but, the share prices reflect signs of over exaggeration. PSU Banking stocks like Dena Bank and Syndicate Bank have not seen their NPAs slide badly.

This makes these stocks an excellent contrarian bet, at least, if you have a 1 or 2-year perspective in mind.

Now, at some stage in the future the RBI could cut rates. The first to rally under such circumstances would be the PSU banking space. Also, a pick-up in growth and the investment cycle would see the banking, metal and infra sector stocks flaring. This is what makes these stocks an excellent contrarian bet at the current levels.

Chasing the defensives stocks at such exorbitant prices would be foolhardy. There is still some value in the banking, metal and infra space, but, in such awful economic conditions, it needs some guts to buy into these stocks. But then, fortune always favours the brave.

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