WILL HISTORY REPEAT ITSELF?!! PART 2

In the earlier Post we had looked at prominent Stocks from the INFRA/ CAP GOODS/CONSTRUCTION space in an attempt to ascertain the kind of Returns they gave after touching their meltdown Lows in 2008-09. In this Post , we shall examine select BANKING STOCKS both from the Private Sector Banking space and PSU Banking space with the same objective.
But before we start off ,one observation is necessary here , which is , that currently the Market seems to be in the process of factoring in possible and likely deterioration of Asset Quality which is why the Banking Space has been rather subdued, if one might call it that, and has been underperforming of late, even in the small pull-back that we saw in the overall Markets in the last few trading sessions. So caution is necessary, since lower levels, even irrationally lower levels ,are possible on some of the Banking Stocks.

The ball-park analysis shows that:

• The three large cap Private Sector Banks AXIS, ICICI BANK, HDFC BANK gave returns of 473%, 406% and 226% respectively from their Meltdown lows, in the susequent 18 month period.
• The more aggressive smaller Private Sector Banks ie YES BANK, INDUSIND BANK gave returns of 846% and 1088% respectively from their Meltdown lows in the subsequent 18 month odd period.
• The PSU BANKS too gave great returns in the 18 month period post their meltdown lows with CANARA BANK giving the highest returns of 525% in a 20 month period post its Meltdown low.

The detailed list for these select Banks is presented below (to be read as STOCK NAME, MELTDOWN LOW DATE, LOW PRICE, SUBSEQUENT HIGH DATE,  HIGH PRICE, PERCENTAGE RETURNS) :

• AXIS BANK 9/3/2009  278   13/10/2010  1595      473%
• ICICI BANK 6/3/2009  252   5/11/2010    1277      406%
• HDFC BANK  6/3/2009  154  4/10/2010   503        226%
• YES BANK   12/3/2009  41   1/11/2010    388        846%
• INDUSIND BANK  6/3/2009  26  2/12/2010 309   1088%
• SBI  12/3/2009  898   8/11/2010  3515                    291%
• PNB  6/3/2009  286   9/11/2010  1395                    387%
• CANARA  27/10/2008  135  9/11/2010  844          525%
• BOB   12/3/2009  180  8/11/2010  1050                  483%
• IDBI BANK 12/3/2009  39  11/11/2010  202          417%

Of course , the usual caveat that the Market and Economic Macros then were quite dissimilar to the ones now does apply ; which implies that the ferocity and extent of recovery this time around would certainly be fairly different too. And, of course, as I said earlier, the Market currently seems to be in the process of working-in Asset quality deterioration issues into the Prices which means that Banking Stocks may see lower prices yet.



SEE PART 1  HERE