Business & Investment

Nifty Bank: Why is Nifty Bank late when Nifty is at its peak? Blame the virus

New Delhi: Why is India’s heart rate index Nifty hitting a record high? Nifty Bank, The second most popular index, but still reaching a record high of 7%? This is the time when even mid-cap and small-cap indexes are trading at a new peak of 52 weeks.

Side by side with india COVID With infection graph Nifty The bank chart shows the connection. Nifty Bank has reflected the impact of the Covid crisis over the past 12 months, as financial stocks are more sensitive to macroeconomic conditions.

On September 24, last year, Nifty Bank hit a low of 20,405 days after India peaked 1,017,754 Covids per day in the first wave of September 18.

Then, as Covid infection rates began to decline, Bank Nifty began to recover, rising to a new high of 37,709 on February 16. At that time, Covid had less than 10,000 people infected per day. During that period, Nifty Bank outperformed Nifty by approximately 40%.

The bank index again showed a negative correlation as the second wave of the new coronavirus surfaced from February to March. With the peak out of coronavirus infection last month, Nifty Bank achieved a monthly return of 9%, 1 percentage point above Nifty.

“As the economy normalizes and growth recovers, finance is in a good position to trade reflation,” said CLSA analyst Vikash Kumar Jane.

He said Nifty Bank’s valuation was trading cheaper than that of Nifty Bank. “FII The position at the bank counter is the lowest in more than 6 years. Positioning is minor as DII is far from its heyday in 2019. It’s a pretty good reflation deal, “he told ETNow.

In a recent report, CLSA states that Indian banks will break out of the multi-year credit cycle and significantly reduce credit costs. “Our banking team believes that large banks have surplus funds to offset the risk of the balance sheet from the second wave.”

CLSA’s current evenly weighted Indian focus list includes

, SBI and other 13 brands.

Several other brokerage firms are also bullish on bank stocks, despite fears that the effects of the new coronavirus infection (Covid 2.0) will put further pressure on loans.

IIFL Securities said the banking sector is ready for growth as the credit cycle is beginning to change. It advised investors to take advantage of short-term uncertainties to accumulate quality stocks. FCMs are in favor of ICICI Bank,

, Axis Bank, and SBI.

Last Friday, Bank of America Securities Europe bought 3.6 million shares of IndusInd Bank through a block trade. “This sector is ripe for integration. The big ones are big. Companies with poor balance sheets tend to give market share to well-managed players,” said Marcellus Investment Managers founder. One Pramod Gubbi said.

Balasubramanian, Managing Director and CEO of Aditya Birla Sun Life AMC, has strengthened the balance sheet of most major banks. NPA The level is not as high as feared.

Nifty Bank: Why is Nifty Bank late when Nifty is at its peak? Blame the virus Nifty Bank: Why is Nifty Bank late when Nifty is at its peak? Blame the virus

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