The Reserve Bank of India and the government are engaged in solving the issues concerning the Indian economy and it will lead to a gradual rebound in the economic activities, said Tushar Pradhan, chief investment officer of HSBC Global Asset Management (India), in an interview to CNBCTV18.The demand has to come from the general economic spread and that can only happen through the right kinds of incentives and the motivations, he added."It remains a watch and watch. Any early indication has to be taken with a pinch of salt because we have been in such a pressure period for some time now. So I do not think there is a going to be quick rebound. It’s probably going to be gradual and the data also appears to be little gradual on the way up,” Pradhan further said.Talking about the banking sector, Pradhan said there are lots of integrated contagion effects which should be carefully looked at. "For example, if I have lent to the real estate, the other situation is that I am also linked to liability against that asset that I hold as a bank. And if my assets start to go bad and there is a lack of confidence in my bank as an intermediary, there are a lot of things involved here rather than just the issue on the asset side and that I have to sustain my liability franchise to survive just as a bank, everything else being equal.”“If a larger chunk is in more secured assets and deposit franchise and liability franchise is much secured, those are the banks that one should choose. If your deposit or liability franchise is weak, no matter how you look at your assets and whether they are good or bad you are going to have an existential issue. So crisis level in the banking system is divided into these 2 and I believe the liability franchise begins to become a lot more important than the assets,” Pradhan added.According to him, investors are focusing on well-known names as confidence level has reduced.About auto space, he said, “Interesting data points are coming out in auto. The higher end of the two-wheeler sector has picked up, even within the four-wheeler passenger segment there selective models which have seen tremendous demand. It all tells you that there is definitely buying power. However, it is probably waiting for a better signal on an economic sense to become broader in the sense that all sorts of autos will start to do well.”He further said that the initial period of a large amount of despondency in autos is behind us.“The first pick up is in the luxury side of the auto which also tells us that a bit of inkling in terms of what to follow which will become a much broader theme in the future. However, the first spring sign is not the real definitive sign that it is truly behind us. We are still in a period of some sort of inconsistency. So let’s wait and watch,” said Pradhan.