Why Bank Nifty is Falling more than Sensex and Nifty?

Introduction:

The Bank Nifty index fell nearly by 1179.5 points or nearly 3.48% and ended up at 32.678.85 on Monday.

Following Banks were the top Losers: IndusInd Bank (5.63%), SBI( 4.61%), IDFC First Bank (4.82%), Axis Bank (3.93%), ICICI Bank (3.89)%.

Reason:

• A few months back, RBI, the central bank of the country released the report and estimated the Gross NPA of the banks to be around 13%-15%.
• This high Gross NPA number by the concerned committee might have also included the possible impact of the second wave of Covid-19 in India.
• And accordingly, we can see the developing scenario of the second wave of Covid-19 and its impact on Bank Nifty.
• In a simple sense, the risk level with banks is quite more.

Impact:

• If there is a lack of normalcy in the economy, it will directly impact the employment levels, self-employed, and the businesses as well.
• Factoring these things, we can expect a new surge in NPA.
• For the same reason, Bank Nifty is falling aggressively in comparison to benchmark indices like Sensex and Nifty.
• This situation will also provide the opportunity for the acquisition of small players by the market giant in the bank sector.

Conclusion:

Investors can take the advantage of this market fall, especially in Bank Sector. And if an investor thinks that this fall is uncertain then one can proceed with the investment strategy of allocation 30%-40% in a lump sum and rest allocation can be taken in a staggered manner in the upcoming 6-12 months. If you are more conservative then, you can extend the period up to 18 months.

But, do not expect the market to fall like previous March as now there is high liquidity available globally. Do proper research and studies before taking allocation in any companies.