The Indian Financial Services sector is broken down into three formal sector indices: The Nifty Financial Services index, the Nifty Bank index, and the Nifty Public Sector (PSU) Bank index. Both the Nifty Financial Services and Nifty Bank index have been showing great leadership, sitting just off their all-time highs on both an absolute and relative basis, however, the Nifty Public Sector Bank index has not participated to the same extent.
Below is a chart of the Nifty Public Sector (PSU) Bank index on both on absolute basis. On the top pane you can see prices hitting a more than 1.5-year low on an absolute basis and a 2-year low relative to the Nifty 500.
This index only represents roughly 2.5% of the entire market capitalization of the stocks listed don the NSE, so the message is less about its broader implications for the market and more on where within the Financial Services sector we want to be looking for opportunities on the long side.
Premium India members, click here for a list of Financial Services stocks we want to buy.