Seems banking stocks are falling too much than the sensex...
Is it good time to pick any of these stocks...?

Is it not that the rate cut at end of the month will give a rally...?

Is it better to go for PSU banks or private banks...?

any recommendations plz

Rate cuts seem a bit distant now.

Rising commodity prices are rising fast and this may not allow RBI to cut rates in the short term.

If you are looking at a medium term investment PSU banks would be a better choice. The valuations of PSU banks are attractive and rate cuts will also bring treasury gains.

For the long term, private banks are the better choice. Private banks are growing much faster than PSU banks and this trend will continue in the future too.

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If we just want to play the steep fall, how about BANKBEES (ETF available on NSE only). It has a mix of PSU & private banks. SBI, ICICI Bank, and HDFC Bank are the major components. More data from the NSE site with the Benchmark url as well.

What exactly you want to play for - short-term gains?

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Yes. For long term gains one may be better investing in specific scrips.

This article is a good one and really frightening, if this is true I can smell trouble in coming months

http://www.business-standard.com/com...316569&chkFlg=

Important to note in this article is the Accounting standards
- Companies don't do mark to market for their Derivatives
- Which means they don't know whether it is making a loss or Profit.
- They also have liberty to carry them till 3 years and report them in yearly results much much down the line. This has to be reported immediately in other countries.

Also to note is
- the way indian banks have sold the derivatives to customers which don't understand them.
- ICICI already has a litigation. Why is always this bank in limelight for all the worse stuff! :-)

I have been waiting for an entry point in banking sector but it seems that the worse is still not over.

It is expected that the NPAs of the bank in this fiscal will be almost double of that of in the year 2007. ICICI bank has already reported 3.72% NPAs in this quarter compared to roughly 2% earlier.

Fortunately though, unsecured personal loans and credit card loans are just 1/6th of all loans for the banks while secured home loans and consumer loans form the 70-80% of total lending. Hence situation still may not be unmanageable for the banks.

Any specific targets in this sector anyone?

Would the bank stocks come out of the losses they are making off late? I hold shares of some banks like Dhanalakshmi, Bank of Maharashtra etc.

Well in past few days banks have been coming up with proposal to raise funds via QIP.

Like first DCB then South Indian bank and yesterday I read one more bank.

Wanted to know how this news play in stock prices? Also how does it effect promoter holding especially in case of DCB where a foreign single entity holds 23-24% holding?

Does the promoter holding gets diluted or whether new shares are issued or are they pledged? What exactly happens?

And is it good for the stock ?

QIP means either shares (or instruments convertible to shares) are issued to QIBs. So net effect should be to dilute promoter holding.

If the QIP is implemented with a clear plan to use the funds for future growth, then QIP will be good for the stock in the long-term.

However if a QIP fails the stock may be hammered.

QIP does dilute equity of a company and thus reduces promoters' stake.

Whether a QIP is good or bad also depends on the price at which the QIP is done.

When a company manages to issue shares at an overvalued price, it is good for the existing shareholders. That is why overvalued IPOs are so good for the promoters .

If the shares are issued at a low valuation, it is negative for the existing shareholders.

SEBI's regulations put a floor to the price at which a QIP can be done and thus a QIP never happens at a steep discount to the market price.

Coming back to the banking sector, it is difficult to say in general whether a QIP is good or bad for banks.

There is no doubt that banks are consistently growing in India, but growth achieved by diluting equity adds no value.

The banks that grow without diluting equity are the best ones as they add value to the current equity.

Investors, especially those who have invested in banks, should give more weight to metrics like ROE, eps and less weight to revenues and PAT.

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RBI has issued a circular that mandates rural branches for private banks: link.

As a matter of principle I find this directive un-constitutional. Private Banks are businesses meant to generate profit. Rural development is the governments job that they may choose to delegate to PSU banks. Why mandate rural branches? If they are profitablle, private banks will open branches without RBI having to tell them so.

If the RBI is serious about rural banking it should provide incentives to private banks instead of directives.

A brewing crisis. A must read article.

A brewing banking crisis - Views - livemint.com

There are crises brewing all around us.

Inflation crisis, slowing growth crisis, power sector crises, airline industry crisis, oil sector crisis, banking NPAs crisis, corporates' external debt crisis, current account deficit crisis, fiscal deficit crisis, currency crisis etc.

Add to that economic crisis in the Europe.

Should we expect a "perfect storm"?

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Markets have an uncanny knack of going against the consensus. 4 years back around this time markets were 20000+ and everyone was anticipating a super 2008 which turned out to be the worst nightmare.

This time round, with all these negativity everywhere, still people are shopping, dining, traveling and celebrating a grand Christmas as we speak.

Like all gloomy days, this shall pass too. Maybe there will be glitches here and there but we will trudge along to a better tomorrow. The idea is to invest wisely so that we appear much stronger and healthier when dawn arrives.

The sector has started witnessing the fall.

An Ok result shares get down 6-10%. Almost good above expected result, still share falls 3-4%.

And a slightest negative news stock gets a toss of 12%.

I plan to start investing in banking mutual fund in one portfolio and averaging in another where I already have 10000 worth investment.

You are missing the fine print

Why does a HDFC Bank command 4 times P/B even in this kind of market ?

Asset Quality. And you can deliver consistent 30%+ profit growth for last 16 quarters only when you have the best asset quality among all banks in India.

PSU banks have pathetic asset quality marked by their rising gross NPAs and net NPAs.

Do not just look into results, delve deeper. Banking sector needs much deeper understanding than simply ratios.