{"id":413,"date":"2020-04-18T03:27:13","date_gmt":"2020-04-18T03:27:13","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=413"},"modified":"2020-05-16T07:41:28","modified_gmt":"2020-05-16T07:41:28","slug":"should-bet-on-banking-sector-in-current-downturn-coronavirus-impact","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/should-bet-on-banking-sector-in-current-downturn-coronavirus-impact\/","title":{"rendered":"Should Bet on Banking Sector in Current Downturn? \u2013 Coronavirus Impact"},"content":{"rendered":"
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Banking and the financial sector\nis among the sectors which heavily owned by the foreign institutional investors\n(FIIs) and the equity index \u2018Bank Nifty\u2019 is one of the most preferred equity\nindices in the domestic market for over half a decade. However, in the current\ncoronavirus pandemic, the Bank Nifty lost more than 40 per cent in just a\ncouple of months. The banking and non-banking financial companies have lost sheen\nin the market amid COVID-19. It is the first time in the financial sector in\nlast 5 years when we witnessed the major declines in the financials and the\ndecline might be correlated with the massive sell-off by foreign investors in the\nlast couple of weeks led to panic selling in the capital markets. <\/p>\n\n\n\n

The FIIs were heavily positioned\nin the Indian financial sector, and the companies received quite an inflows in\ngood times. Mostly from passive or index funds which are now are facing margin\ntriggers leaving them no choice but to cut their positions. The International\nMonetary Fund has cut India\u2019s GDP growth estimate to 1.9 per cent for\nFY2020-21. The banking and financial sector whose prospects are connected\ndirectly to the economy is bound to be affected by the current slowdown in the\neconomy due to the pandemic. The Indian banking system which was already\nsaddled with bad loans might see a spike in bad loans as the slowdown could\nlead to job losses. <\/p>\n\n\n\n

The downturn in banking and\nfinancial sector, however, presents itself as an opportunity for long-term\ninvestors who can pick the top quality stocks with strong fundamentals in the banking\nsector, which by the way are trading at discounted prices but in peaceful times\ntrade at exorbitant valuations. Many opportunities have arisen in the past few\nyears such as life insurance, general insurance, and asset-management\ncompanies. Now, many fintech companies are likely to be listed soon. So, the\nlong-term prospects of the banking sector remain bright. Besides, there is a\nhuge untapped potential in the Indian market, which provides ample\nopportunities for growth in future. <\/p>\n\n\n\n

But, it doesn\u2019t mean that\ninvestors can expect a quick turn-around in the sector stocks. Amid\ncoronavirus, many investors lost their capitals and many pulled everything out\nof the market to invest in debt instruments. It would take some time to see the\nrally in the stock prices. So, investors who have a long-term investment\nhorizon can think of increasing the exposure of equities in the banking sector.\nThus, investors should concentrate on top-tier banks with zero-debts, and have\nhigh-profit margin stock. Most importantly, the stock must have the capacity to\nface the bottom and give a big surge. <\/p>\n\n\n\n

Investors who are looking to make\nshort-term returns should stay away as it may be too soon to turn averse to\nbanking and non-banking financial companies\u2019 stocks as we don\u2019t know the extent\nof the impact of coronavirus on the stock market<\/strong><\/a>\nand banking sector. There is a possibility that it is too early to predict the\nimpact of COVID-19 on earnings. But, if it turns out worse than expected, the\ninvestors could be in serious problems. <\/p>\n\n\n\n

The Reserve Bank of India (RBI) is\ndoing what\u2019s within its capacity to make sure the financial sector remains\nviable and to reinforce the worsened economy due to coronavirus outbreak and to\nprovide support by providing the liquidity for growth and help the country to\nemerge out as a winner in the post-COVID-19 world. <\/p>\n\n\n\n

In such times, it would be\nadvisable for retail investors to assess the situation before investing in the banking\nsector and be prepared for the worse. <\/p>\n\n\n\n

Disclaimer:<\/strong> The views and opinions at Invest19.com are\nexpressed by the experts are for educational purposes, not to profile any\nprofessional advice to encourage users to make investments. Invest19.com\nadvises users to check with the certified experts before making any investment\ndecisions.<\/p>\n

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Banking and the financial sector is among the sectors which heavily owned by the foreign institutional investors (FIIs) and the equity index \u2018Bank Nifty\u2019 is […] Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":466,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7,10],"tags":[97,98,99],"class_list":["post-413","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-market","category-investment","category-featured","tag-banking-sector","tag-investing-in-banking-sector","tag-investing-in-banking-stocks"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/413","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=413"}],"version-history":[{"count":1,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/413\/revisions"}],"predecessor-version":[{"id":415,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/413\/revisions\/415"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/466"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=413"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=413"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}