INDIAN BANKING

One of the sector which has provided most support to NIFTY and markets in general is banking. It clearly looks like the bull run in banking is on and can continue further with many large sized PSU banks making life highs. I accept the point that banks have a lot to grow from here if the economy has to grow at above 8% CAGR and am bullish on banks from a long term perspective. But in the short term i think the banks can now start to underperform and we may see a small correction in the banks. I think this would be because most of the other big stocks have seen a decent correction from thier highs and the banks are one of the groups where this correction has not happened. For instance while NIFTY is about 1% below 20 dma some of these banks are still above thier 9 dma let alone 20 dmas. I think good opportunity will come in second tier PSU banks like dena, canara, idbi etc. Of course i have an implied assumption that markets will also see some correction from here.