Avoid banking and financial stocks
Why you need to avoid Indian Banking and Financial stocks [2019]
1. Total NPA's (bad debt's/Loans) has crossed 10 LAKH CRORES as on 31st March 2018 (i.e, this data is as of almost a year back!)
2. Worst affected are Nationalized public sector banks like SBI, Bank of Baroda, PNB and few others.
3. Private sector banking frauds like ICICI, Axis, YES Bank that have sprung up is also a cause of concern.
4. DHFL fiasco (not proven in courts of law) have again exposed public sector banks vulnerability.
5. NBFC's like LIC's exposure to ILFS.
6. Under reporting of bad debts by media ex: like in the case of Winsome diamonds amounting to 7,000 crores. God knows how many more are buried deep!
If the above is not enough, we are awaiting the balance sheets of PSU's which will be public by the financial year end (from April onwards) which will clearly reflect the state of affairs of Indian banking sector.
Adding salt to injury, instead of bailing out the banks by stringent recovery, they are being asked to do loan waivers [including NBFC's like LIC (exposure to ILFS)].
One thing that has to be noted here is in NBFC's like in LIC, the money involved is that of the general public - and it's all notional. What it means is, if there are 90 crore policy holders, not all will claim their policies except for a small fraction. This is like a bubble waiting to burst anytime soon.
The very recent DHFL fiasco has sent jitters among investors, with the stock crashing from Rs.600 to Rs.130 in recent times.
Do not wait for the sector to fall, be proactive and take adequate measures to safeguard your investments.
Investing in good performers has also turned risky, Vijaya Bank which boasted of the lowest NPA in the industry is now being merged with Bank of Baroda which had come close to liquidation owing huge bad debts. Once the balance sheets are amalgamated, the performing banks balances sheet is also bound to get affected and will thereby affect it's stock price in the coming months.
BFS has the biggest share of Market cap in the National & Bombay stock exchange.
Once Mutual Funds and DII investors factor in and pull out their investments, it is very wise to stay out of BFS stocks or come out of existing investments if very huge. THIS IS A TIME BOMB WAITING TO EXPLODE...
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