Banking Sector: Year in Review

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Author: Siddhesh Sarode (BBA-IT 2017-20)

Banking sector started with a pretty slow trade on, marking the new year opening of 2019 with opening of 27,304.55 points (as of 7 Jan 2019) . Turning ahead with the introduction of ICT enabled banking features and drop in PSU bank customer retention, the market showed a bear side to the BANK Index till the end of the fiscal year. With new boom of RBI norms changes, the banking sector showed a massive bounce back in the month of March and April , marking total volume and sales increase by 2678.27 points. The Election of May 2019 added onto the fear and tension in the banking sector , with major party influencing the policies and laws , the market was laid low for a couple of weeks. Third week of May became the market changer as the Exit Poll predicted NDA of regaining power , with positive response from dalal street the banking stock with other market indices soared , which brought up nearly 5.33 Lakhs Cr. from the market to the investors , other markets were being directly influenced too. The rally lasted till first week of July touching the index to 31660.81 points. Marking the 5th of july , the Bank Index showed nose dive technicals.The introduction of new laws and norms by Finance Minister N.Sitharaman erode the investors money by 2.22 lakhs Cr in couple of days.The banking sector since then saw a really bad phase with lowering the Index down to 26727.24 points.
The major anchor weight was Repo Rate cut , an amalgamation of various PSU and district corporate banks (Karnataka Bank) and the Case of YES BANK which was termed as “Diamond Stock” in the starting of the year and then started to degrade, with lakhs of investors vested in it.The Yes Bank Crisis got the Banking sector investor in dilemma and so does the stock started to dive in from 275.09 INR to 47.05 INR (52 week lowest of 29.2 INR). With a total of 12 banks (as of listed on NSE) , all the bank showed negative change in there stock price with lowest being -3.31%Chg of RBL Bank. Government is putting heavy amount of taxpayers money to solve all the NPA’s , which doubts the integrity of the banking system ,as most of all the state owned bank were indulged in NPA clearance. With newer reforms and international monetary changes , the indian banking sector is likely to grow back in year 2020-21, with major focus based on categorization of banks , minimizing NPA and increase in lending options by Banks. Private banks like YES Bank is trying to meet its financial debt by considering foreign investment as to maintain its position in the market and pay back all the debts. While it's too early to predict the path of the Banking Sector , it is sure that Private Sector Banks will perform adequately enough to maintain investor interest and pull back the stock up to the bull position.


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