Summary
In a bull market it is difficult to imagine that things could go wrong. Similarly, pessimism prevails in a bear market. In both market situations, there is a tendency to paint everything with the same brush. However, where the financial services sector is concerned, doing so would be a mistake. While all companies fall under the term “financial services”, they have very different operating metrics and must be evaluated individually. Just put it in perspective: Is BSE a financial services stock? Should it be considered at par with an NBFC or an online insurance provider?
Any investor interested in buying India’s growth story must have financial services stocks in their portfolio. The reason? Growth in all sectors of the financial services sector has a well-defined relationship with growth in GDP. It generally grows faster than GDP. Therefore, whatever the short-term problems (and there have been quite a few), in the long run, financial services as a sector is bound to grow as a growing problem.
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