Mumbai: Despite a rise in non-performing loans, banking stocks have see a sharp surge in prices over the last three months on expectation that a revival in domestic economic growth would help the sector tide over the present crisis.
The BSE Bankex has emerged as the second best performing sectoral index in the past three months gaining 18.21 per cent as against the Sen-sex gain of 8.17 per cent.
Among the mutual fund schemes, funds focused on bank stocks have given the highest return in last three months. According to experts, markets have already factored in most of the negative news in the banking sector.
“Most of the bank stocks especially, the state owned banks had seen a deep correction of about 50-70 per cent during the last one year. Investors believe that domestic banks could experience further pressure in their asset quality. However, the markets are looking forward to consolidation in the banking sector, recapitalisation of public sector banks and recovery of bad loans,” pointed out Ambareesh Baliga, senior research analyst.
“Domestic economic indicators are showing signs of improvement. Market participants are expecting a better performance from the banking system in such a recovery process,” he added.
With the economy showing signs of recovery, analysts at Morgan Stanley pointed out that investors are showing significant interest in lenders.
