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Saturday, 7 February 2015

Portfolio Strategy: Feb 7th, 2015: Banks Underperform

I have been putting my bets on financials for some time now, specifically focusing on banks.  I had written about this earlier in Dec 2014, and again in Jan 2015.  Banks have done very well over the past year as shown in the performance of the BANK NIFTY in the graph below.

Just in the last 6 months as shown in the picture, the BANK NIFTY has given returns of ~25%


However, with earnings season kicking in, the sector has not performed well in recent times.  Here is the same graph zoomed into the last month
Notice that in the last month, the BANK NIFTY has been especially volatile, swinging by 2000 points.  My opinion is that the run up from 18500 levels to 20500 levels was a little too steep, and with earnings results disappointing across multiple banks, the index has crashed back to 18500.  

I continue to be an optimist on the financials sector, and intend to use this opportunity to increase my position in banking sector.  My January salary has given me some free cash, and I am putting it into banks via RELIANCE BANKING fund.  Lets hope the budget is kind to my favorite sector.  There is also the potential for a rate cut this month, which should fuel a furious rally in this sector!

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