The Banking and Financial Services sector in India has shown significant growth over the Nifty 50 Index over the past decade, with consistent returns. However, it has been underperforming since September 2019. This underperformance, combined with reasonable valuations and strong balance sheets, presents an interesting opportunity for investors, as the sector’s potential for reversal and a reversal could be significant.
DSP Mutual Fund has launched the DSP Banking & Financial Services Fund (DSP BFSF), offering investors a chance to invest in the long-term structural opportunity in the banking and financial services sector. The fund includes major areas like NBFCs, housing finance companies, life insurance, non-life insurance, AMCs, exchanges, and depositories, which have grown faster than India’s nominal GDP in the last 15 years.
This creates a profit opportunity of over $4 trillion. The Nifty Financial Services TRI has delivered over 12% returns over a 7+ year period, while BFSI forms 38% of the profit pool of India’s Top 500 companies. Bank balance sheets have grown stronger with lower NPAs, potentially boosting credit growth. Kalpen Parekh, MD & CEO, DSP Mutual Fund said, “We are happy to launch the NFO when valuations are reasonable.”
