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Banks Devoid of Modi Lustre, Opening ValuePro's Treasure Trove, and More... - Views on News from Equitymaster
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The Equitymaster Research Digest

Banks Devoid of Modi Lustre, Opening ValuePro's Treasure Trove, and More...
Nov 20, 2015

What if Modi fails?!

If you ask any investor their biggest fear about investing in India, that's the response you'll get.

Christopher Wood of CLSA, one of India's most bullish FIIs, lists Modi as the biggest and only game changer for India's fortunes. The stakes on Modi's performance - and the lack thereof - continue to run high, even as the PM has just 42 more months to deliver.

This was not the case 18 months back. Nobody wanted to worry about the possibility of Modi's failure then. The electoral results, no doubt, gave Modi a huge thumbs up. And the stock markets rewarded entities to be run under Modi (public sector units) with valuation re-ratings.

Public sector banks were the biggest beneficiaries. Investors expected companies to multiply their capital expansion plans under the new government. They expected overnight reforms and long-stuck projects to get a kick-start.

With the biggest balance sheets, the PSU banks were poised to capture this lending opportunity. And since May 2014, with their Modi lustre, PSU banks of varying size and asset quality outshone most other financial entities.

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