Nifty: Bank Nifty outperformance may ease further
The appointment of Raghuram Rajan as RBI governor, coincided with
perceptible change in India's monetary policy. A host of measures were taken to
successfully improve the faltering current account situation and sliding INR.
Though, the measures did not see any marked improvement in credit
growth or asset quality of banks, especially PSBs, the Bank Nifty witnessed
huge outperformance over Nifty; perhaps due to under-ownership of financials
since global financial crisis
Since beginning of 2015, the outperformance has eased to some
extent. However, considering the current state of economy and credit, the
outperformance does not seem justified and needs to correct further.
The first phase of correction has been led by PSBs and ICICI. The
next phase may see some private banks also joining.
Could short Bank Nifty Long Nifty still be a good pair trade?
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