PensionIndia

Time and again I often tell people that the art of creating wealth is only long term and picking up stocks when everyone is negative about a particular sector or industry.

One such opportunity may be seen now in the Indian banking space.

Most Indian banking stocks have been quoting with deep cuts. Till the other day, SBI was projected to be inching towards 4,000 mark, but it's now quoting near the 2,300 mark. ICICI Bank has lost about 1 per cent in the past one month. Axis Bank is down but rising of late, HDFC Bank has lost about half a per cent, Union Bank of India nearly half a per cent; Canara Bank one and PNB is down over 1 per cent in a month while shares of Yes Bank have turned wobbly.

The BSE Bankex is down about 2 per cent over the past one month, thanks mainly to SBI.

Banking stocks are considered the nearest proxy to the economy and challenges before the economy are very much visible; government deficit levels are going out of control; rising crude prices not letting inflation to come under control; markets are choppy which won't allow the government to carry on with its much-awaited public issues; interest rates set to rise further as Reserve Bank of India takes on inflation head on; rise in cost of money has stalled capex cycles; high commodity prices (they are cooling of late) cutting into margins of companies across sectors and inflation is already singeing demand.

At the same time, many want to see better times in the second half of the financial year. There are projections that interest rates will peak in the second half and inflation will come down. What more, banks are seeing healthy growth in savings, thanks to a rise in rural income. Credit offtake has also been quite robust in spite of signs of slowdown. And most economists see a takeoff in the capex cycle over the next three-four months.

So what are you waiting for go ahead and add some of the banking stocks in your retirement kitty.

Harbinder S Mehra(Haru)