SFIO summons bank bosses and markets lose ground to continue with their fall. Banking stocks took a big hit. Mutual Funds did not have much of impact as very few fund houses have exposure to banking sector. Just on the same day, newspapers carried articles about MF’s having lesser exposure to PSU banks, which also confirmed the same.
As markets tanked, there were widespread news that, 2 lakh crores of investor wealth is lost in one day. BSE market cap goes to Rs.144 lakh crores from Rs.146 lakh crores. Only those investors who bought at high levels were actual losers, even for them, only if they sell and move out, there is a loss. Else it is only notional loss and over a period markets will recover.
With the kind of bad assets that banks have been building, some prominent fund managers are of the belief that the banking system will collapse and that will be the biggest disruption of this decade like the financial crisis that happened in the last decade.
Portfolios that are secure from such sectors that will vanish for the next generation are the ones people have to be invested in, to ride the biggest wave of financial growth that the world will witness in the coming decade.