Thought for the day
"No man ever steps
in the same river twice, for it's not the same river and he's not the same man."
—Heraclitus (Greek, 544-483BC))
Word for the day
Donnybrook (n)
An inordinately wild
fight or contentious dispute; brawl; free-for-all
(Source: Dictionary.com)
Malice towards none
What would
change if India gets a permanent seat in UNSC?
Bank Nifty: Treading dangerous waters
Bank Nifty has is trading 70% higher than the peak registered in
January 2008. It has gained more than 90% since the bottom of 2013.
Fundamentally the returns given by banking stocks could be matter
of interesting debate. Since 2013 the banking sector has seen consistent
decline in credit growth.
A large part of this decline could be structural as (a) the fuel
price subsidy reforms and deregulation of petrol and diesel prices has
drastically reduced the funding requirements; (b) the change in taxation norms
for debt oriented mutual funds has moved the short term credit market away from
banks to bond market; and (c) lending against gold and shares has also fallen.
The cyclical part of decline especially in housing, commercial
vehicles and infrastructure projects has also worsened in past three years.
The capital inadequacy of PSU banks has risen with
worsening NPA cycle.
These factors make it difficult to expalin this bull market in
banking sector.
In strict technical sense, Bank Nifty broke down on daily charts
last month. This month it has shown distinct signs of breaking on Weekly
charts. A fall below 16200 level may open the flood gates.
Fall below 970 for HDFC Bank and 644 for Yes Bank could be two pointers to
the bad times coming in Bank Nifty.
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