Saturday, October 1, 2011
MY SPECIAL VIEW ON BANKING SECTOR , BANKS AND BANK ETF
Maheshji Namaste, as you told that you are bearish on banking and it is true. Most of the stocks are at 52 week low. Please, now you advice a strong banking stock for value buying. From Narendra.
Hello Kaushik Ji,
I regularly follow the reviews provided in your blog and they were really helpful.
I'm planning to invest in Banking related ETF funds for long term (around 5 years).Would you please suggest which one will be good as I could see many available as below
Goldman Sachs PSU Bank Exchange Traded Scheme
Reliance Banking Exchange Traded Fund
Goldman Sachs Banking Index Exchange Traded Scheme
Kotak PSU Bank ETF
Thank you for your time and advice.
Your suggestion on SIP of Rs5000 per month on SBI.
Now that price of banking stocks have come low, I want to invest in one which can give me good return in 5-6 years. Please give your opinion on banks
1. Narendra ji, Sreenivas bathula ji , Pravesh ji and Rajeev Daniel ji I wonder to see this huge interest in banking stocks from most of my respected regular blog followers , so I decided to reply all of your questions in this single but detailed article on banking stocks and banking ETF.
2. Before we continue I told you an old story on infrastructure sector because this story is helpful to us for understanding...how sectors rotation works in stock market? In august 2009 all infra stocks just start downtrend from his huge rally of 3 years and this is the time when reliance mutual fund launch his infra mutual fund “ reliance infrastructure fund “
3. And I advice my blog readers in august 2009 that they wait this fund below 10 and I remember you when this fund NAV fall below 10 and that is the right time to start sip in this fund. Read this link for see that what I advice in august 2009
4. When above 2 articles publish on my blog , I face very negative comments from my readers that I do not knew ABC of stock market and misguide the inventors, foolish, etc. because my readers do not agree with my view and they are bullish on infra sector as per TV analysis. They think this fund NAV never fall below 10 and just double in 1-2 year.
5. Ok, after some time at February 2011 I remember by blog readers that reliance infrastructure fund now available @ 8.81 only and this is the time of start a 2 year SIP in this fund.
at this article http://mutualfundgenius.blogspot.com/2011/02/reliance-infrasector-fund-now-availble.html
Then my blog readers again disagree with me because they think infrastructure sector is never performing again. Now this reliance infrastructure fund NAV is 7.2607 only.
6. Now we come to our main question on banks, I think downtrend in banking stocks is just start and there are still 20-50 % downside remains in these stocks why? I tell you my thinking on banks working because I work as a bank recovery agent ( TRA) in Rajasthan government read my official blog for understand my nature of job
7. Banks give KCC (kisan credit cards) to farmers on their lands and now government plan go give KCC to all of farmer which not get it yet.
Suppose On starting KCC limit is 100000 and farmer enjoy the loan ( which give him to buy seeds and fertilizers but they utilized it in his daughter marriage and to buy electronics items, motor cycle , etc and some of amount is enjoyed in liquor’s they never repayment it )
8. When this loan is became as NPA then bankers file their recovery case with me and when I attach there land then defaulter farmers contact to bankers, bank see their current outstanding amount is 173000 with interest then they increase his KCC limit from 100000 to 200000 ( because price of their land is also increase on paper) and sanctions a new loan of 200000 to farmer and deduct his old outstanding NPA 173000 from this amount and farmer also enjoy 200000-173000=27000 for liquor/bike/electronic items.
Bank show 73000 as interest income in his balance sheet. Next year bank again increase limit 200000 to 300000 and deduct old outstanding 224000 from this.
9. If you understand point 8 then I think you also understand that how wrong this method and what happens with these bankers when price of land get stable and all farmer denied to repay his KCC loans?
10. So I think we must be avoiding banking sector for coming 2 year. Otherwise make a SIP in GS bank bees ETF in this pattern
First year invest only 1000 per month in bank bees
Second year invest 2000 per year in bank bees
Third year invest 3000 per year in bank bees
So Pravesh ji avoid 5000 per month investing in SBI and consider GS bank bees ETF SIP in my method of “pyramid style SIP” where amount of investing is increase year by year and this method is beneficial in both conditions either NAV of fund is down and up.
11. Sreenivas bathula ji nareendra ji and Rajiv denial ji I think Goldman Sachs bank bees is my choice in banking sector at this time so For more details on GS Bank BeES read this link
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