 "illustration, deposit rates, banks")
Is this a good time to enter banking funds?
Banking sector funds are, on an average, up 9.78 per cent over the past month and 12.08 per cent over the past six months. In calendar year 2018, these funds had, on an average, registered a decline of 0.59 per cent.
Several factors are responsible for the improved performance of this sector. One view is that the bad asset quality cycle may have bottomed out. Non-performing assets and slippages have declined in the past two quarters. Banks have also shown strong loan growth, benefiting from the troubles of non-banking financial companies. However, deposit growth remains muted.
Banking sector is a proxy for the economy. If the economy does well, so will this sector. Most diversified equity funds, however, already have large exposure to these stocks, so you should make very limited investment in these sector funds, if at all.
