Synopsis
Which is the sector where there is, literally, no small-cap company? The answer: PSU banks. In terms of market cap, none of the banks fall in the small-cap category. But yes, there are small PSU banks β those with a smaller loan book size than others. For a majority of the investors and traders, however, a bank whose stock price is below Rs. 50 may appear to be a small-cap β though it is not. So, when looking at banks β or for that matter any stock β make a distinction between the absolute price of the stock and its market cap. Now, the question: Should you buy stocks of PSU banks that have seen relative outperformance in this phase of correction? The question is relevant as the risk of overall market connection is still high.
The last fortnight has seen a clear divergence in the performance of the banking space and rest of the market. PSU banks have either been able to keep their heads above water, or even move upward. Is this because of rotational trade β where the money stays in India but moves from other sectors to banks? Or is it because PSU banks have actually cleaned up their act and are all set to outperform this phase of correction? These questions are
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