Capital raise isn't a reason to turn optimistic on banking stocks

Rs 47,000 crore raise by private banks in two months may be just adequate to meet the provisioning costs

The Nifty Private Bank index has gained 15 per cent in three months, against the 13.7 per cent rise in the Nifty. The sum of Rs 47,000 crore raised by six banks since May has propped up sentiment. Their ability to raise such a large amount in a short span and even bring in quality overseas investors is testimony of their attractiveness for large investors. But for the rest, the small and retail investors, deployment of this capital should be seen microscopically before turning positive on banking stocks.

For one, despite May to August being busy months of capital raising by