Skip to main content

CONTRA view on financial stocks

Five reasons why as an investor you should hold on to your financial stocks.

  • UNDER PENETRATED

According to a report by Boston Consultancy Group, India has the second largest financially excluded population of about 135 million, which is next only to China. Though the development in terms of technology, regulation and compliance has taken place vary rapidly, the financial services sector in India still remains highly under penetrated. Just imagine how big is the opportunity that needs to be tapped. This should be enough motivation for an investor to remain invested in financial stocks.

  • EVOLVING CAPITAL MARKET

As per rough estimates, only about 2% of Indian population of 1.1 billion invest in capital markets. Of this, individuals invest only 5% of their total savings into stock markets — an indication of the kind of potential Indian financial services have. The sharp rise in India’s stock markets since 2003 reflects its improving macroeconomic fundamentals. The next growth opportunities, believe analysts, will come from online trading, internet banking, currency derivatives and commodity derivatives in this space. Thus, analysts believe if you hold stocks of brokerage houses, there’s no reason to panic, as growth prospects are robust and will be highly rewarding in days to come.

  • LACK OF LINKAGES

The Indian financial sector has remained relatively sheltered from the ongoing volatility in the global markets. The firms in the financial services space don’t have any substantial linkage to the subprime losses in the US except for some banks, which is too low to have any bearing impact. The lack of linkages means they are comparatively insulated against volatility in global markets.

  • ATTRACTIVE VALUATION

For the long-term investor, current valuations are fairly attractive. The financial stocks have already factored in negative sentiments. Analysts advise that one could start accumulating value stocks in the financial services space in one’s portfolio. Almost all public sector banks are trading at book values. They have all reduced their non-performing loan book. With a strong retail franchisee network and expanding horizons through bancassurance channel, they will be the king of good times in future.

In the current scenario, when the index has gone down by almost 40% and financial services have taken a big hit due to the financial turmoil in the US and European markets, the valuation has become really compelling and very attractive for investors who have a two to three years horizon.

  • CONTRARIAN THOUGHT

The time to buy is when blood is running on the streets. This is a renowned dictum which was issued by Baron Nathan Rothschild in the early 19th century. If you believe in contrarian approach to investing, then there cannot be a better opportunity than now to buy financial stocks. Offloading the financial stocks in the crisis is comparable to selling your livestock during a drought.

Thus, it’s important that you are fully aware of financial considerations of selling stock in a market bottoming out.

Popular posts from this blog

Axis Mutual Fund NFO - Axis Fixed Term Plan Series 18

Axis MF has announced that the NFO period of Axis Fixed Term Plan Series 18 (15 Months) under Axis Fixed Term Plan Series 17 19 has been preponded from February 27 to February 24.        --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.   Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   These Application Forms can be used for buying regular mutual funds also   Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) HDFC TaxSaver ICICI Prudential Tax Plan DSP BlackRock Tax Saver Fund Birla Sun Life Tax Relief '96 Reliance Tax Saver (ELSS) Fund IDFC Tax Advantage (ELSS) Fund SBI Magnum Tax Gain Schem...

Budget 2014 Highlights for Saving

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   The new finance minister Arun Jaitley has just presented his first budget. What measures does the budget contain that will specifically impact savers and investors? Here they are: 1. Housing loans exemption for self-occupied properties increased to Rs2 lakh: Earlier this amount was Rs1.5 lakhs. This move barely keeps pace with the inflation in asset values.   2. Investment limit under 80 (C) increased to Rs1.5 lakh: This is a good move again and offers some relief to taxpayers.   3. IT exemption increased to Rs2.5 lakh, Rs3 lakh for senior citizens. This comes as a minor relief for taxpayers.   4. Annual PPF ceiling to be enhanced to Rs1.5 lakh, from Rs1 lakh: This is in tune with the change in 80C.   5. Long term capital gains tax for debt funds has been rai...

Franklin India Taxshield

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   This fund maintains a quality portfolio of large-cap orientation. The fund manager adheres to a bottom-up investment approach and looks for companies whose current market price does not reflect future growth prospects. Investments are in companies that can drive future earnings growth. Stocks are selected based on the company's financial strength, management's expertise, growth potential within the industry, and the industry's growth potential.   The portfolio is well-diversified across sectors and market capitalisation and follows a blend of value and growth style of investing. The fund follows a predominantly large-cap allocation of over 70 per cent, with small-cap allocation never exceeding 10 per cent since inception.   Performance The fund doesn't dev...

ELSS Funds for different Risk Profile

Match your Goals Risk Profile With ELSS Investment   DIFFERENT TRACKS Unlike funds with a clearly defined investment universe -- large-cap, mid-cap or multi-cap - Tax Saving Schemes do not specify investment focus If you are looking for an equity Linked Savings Scheme (ELSS) to pare your tax burden, the plethora of options may confuse you. Many investors simply opt for ELSS funds , also called tax saving schemes with the best return over a certain time period. However, this may not yield the best results. There are several types of ELSS funds and it requires a nuanced approach to pick the right one. DIFFERENT RISK PROFILES Unlike funds with a clearly defined investment universe -- large-cap, midcap or even multi-cap schemes in the ELSS category do not specify their investment focus. While these schemes have the flexibility to invest anywhere, most tend to follow a defined template. For instance, some funds take a distinct large-cap tilt with a limited exposure to mid or small-cap st...

Reliance Tax Saver Fund Online

Invest in Reliance Tax Saver Fund Online   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saving Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan Invest in Best Performing 2016 Tax Saver Mutual Funds Online Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a mis...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now