42.42%: Average decline in banking and financial services funds over past three months.
- Banking and financial services funds have fallen the most among all categories of funds over the past three months.
- Banks in India, especially public-sector ones, have been struggling with non-performing assets (NPA) for a long time. But the market reposed faith in private sector banks.
- This was dented by the YES Bank crisis. Non-banking financial companies (NBFCs), which these funds also invest in, have also faced a massive liquidity crisis since the events at IL&FS.
- The decline, however, also offers an opportunity to individual stock investors. Bluechip players in the banking sector have become available at very attractive valuations, having suffered a price decline of 30 per cent or more.
- Opt for players with high capital adequacy. Go for those that have demonstrated superior risk management ability in the past.
- An investment in a quality banking and financial services fund now, via SIP (or even lump sum, if you have a high risk appetite) and with a seven-year horizon, could reap rich rewards.
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A few links for further reading
Invest and emigrate
The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.
Small savings schemes
Investors in small savings schemes breathed a sigh of relief when the government announced on October 1 that interest rates on these instruments would not be revised for the fourth quarter of the calendar year. With the economy witnessing a slowdown, and the stock markets also turning volatile, many investors are looking for alternative avenues to park their savings. Small savings schemes, with their sovereign guarantee, have emerged as a viable alternative.
Hard path to growth
The signals for the economy are not positive: overall demand is yet to pick up; the share of total exports in India’s GDP is declining, and industrial output pattern remains worrying.