MyValueResearch

Reasons why an investor should not sell their stocks in the financial services space?

Reason 1-

Indian domestic banks are well capitalised and regulated. Indian banks were not exposed to the collapsed US subprime home loan market at the heart of the crisis and so India’s financial system is not going to be hurt. Moreover recently RBI has also broadly endorsed ICICI Bank’s position as a well-capitalised and well-regulated bank.

Reason 2 –

What gave rise to the increased activity in banking in the period from 2003-2007 in US was the rise in personal consumption, for that, people started taking more and more loans which ultimately led “Sub Prime Crises”. Same case with over leveraged economies such as UK and Denmark. But in case of India and Russia etc., personal debt as a proportion of GDP is much lower.

Reason 3 -

Asian economies including are still doing better and they may continue to be attractive and may not experience a major slowdown of FDI flows, largely due to intra-regional flows and attractiveness of their markets owning to demographic profile and growing consumerism.

In the specific case of India, although trends suggest reasonably good inflows so far, it is a bit early to take a definitive call. That Japanese companies and others from Taiwan and South Korea are considering India as the alternative to China as a place to do business could stand India in good stead. And India may attract the targeted $30-billion in this financial year. Japanese MNCs are seeing India, replacing China as the most promising country for longer-term prospects, with the number of companies planning to expand operations in China declining.