Should investors buy bank stocks now?

With the recent hike in CRR by the Reserve Bank of India, bank stocks are taking it on the chin. The Bankex is down about 5-6% today, and in the last few months, banks have corrected significantly. Is this the best opportunity to buy bank stocks?
Anil Manghnani of Modern Shares and Stock Brokers believes that such a dip warrants a buy in the banking space. He mentions, "If you look at many of the PSU stocks, they already, in the recent fall, came to last June levels. So most of the interest rate negative news has already been factored into the prices. A fall in the banking stocks, just looking at the longer term charts on the Bankex still warrants a buy."
Head of Research at Karvy Stock Broking, Hemindra Hazari sees great value in banking stocks at current levels and recommends to buy into this weakness. He advises, "Our recommendation to our clients is to buy into this weakness because I expect banks to announce sharp increases in their PLRs with a minimum PLR increase expected of about 50 bps. Thereafter, you could see some correction in the net interest margin."
More importantly, he observes that some of the PSU banks like Bank of Baroda, Union Bank, Indian Bank, are trading very close to the FY07 book values. He adds, "This indicates that the market expects banks to report losses kind of FY08, which I think is a tall order because in the worse case scenario, you could see profits declining. But I do not see losses coming in. Therefore, we see great value in these bank stocks and that’s what we are recommending to our clients."
However, Rajen Shah of Angel Broking holds a different view. According to him, one should stay away from banking stocks and that bank stocks may face another 5-7% drop. Advises Shah, "I would keep away from banking stocks and that is what we have been advising for the past four months to actually be away from this sector, which is actually very sensitive to rate hikes. We are seeing the hike in the rates actually taking its toll on the banking stocks. I would still be cautious on the banking stocks. Maybe we could even possibly see another 5-7% kind of drop in banking stocks"