On Monday, there was a sudden drop in banking stocks. It was after a long time that both private and public sector banks saw a sharp decline. A cursory look suggested it was a sectoral trend. But a closer look suggests it had to do with business updates from just three banks – HDFC Bank, Union Bank, and Bank of Baroda. Because the overall mood is bearish, the street ignored the fact that, at least in the case of Bank of Baroda, the updates were not bad. But as banks are highly owned by FPIs, you cannot rule out a further drop if there is any more selling by FPIs. However, given that banking is a sector where valuations are still reasonable, there is a case to be bullish in times of volatility.
