Due to multiple rate hikes by RBI during this year, most of the Indian financial stocks have got beaten . Even large cap bank stocks are trading almost 40% below their peaks. Does it mean a big doom for the financial services sector?.. It is definitely a bad patch . With more than 50% of the population being young and raring to go, there is a high probability that we have a lot of potential for this sector. When compared to developed economies , the market cap of financial services sector looks very small. These may be testing times but I feel that there is a huge potential for this in the long run.
This presentation http://specials.rediff.com/money/2008/jul/31sli1.htm ,on rediff is an ample proof for this is in one sense. Most of the companies in the list are from financials sector.
2 comments:
I agree, the long run future looks extremely bright for financial services. The potential for financial deepening in India is massive and the high savings rate bodes well for expansion of the product base.
The relatively low current market cap is a reflection of the infancy of the wholesale capital markets which should expand over the next decade to meet the demands of corporate sector.
As for the recent falls in banking sector stocks, this is a phenomenon which is being seen the world over and should correct inside of two years, as the global banking and credit system finishes adjusting for the sub-prime fall out.
Alex
alex@moneyvidya
http://www.moneyvidya.com
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