Letter # 64, 30th November 2021
Bank nifty has fallen 13% in 22 days despite record Sept-21 profits and stellar guidance.
It has more to do with ownership than fundamentals. Of the ten most over-owned FII stocks, how many would you guess are financials?
Large FII selling is a short term demand-supply mismatch issue, but markets are eventually slaves to earnings. And we think banking sector is favourably placed.
Unsustainable situations find a way to not sustain. A road to Indian financials via ‘unsustainable’ situation in Turkish lira now, and Indonesia in 1990s.