NIFTY made another all time high yesterday.
One group of stocks which is not at all enthused with the bull run is — PSU Banks.
These stocks perform badly in bad times. Even in good times, their performance is below ordinary.
Invest in PSU Bank stocks and you can be absolutely sure — your money is about to be destroyed.
These stocks have proved it earlier and again proved it during the current bull run.
In the last 365 days, PSU BANK index has moved higher by 55%.
That is good news.
Some of the stocks have made wonderful gains in this 1 year period.
That is also good news.
Good news ends here.
Let us have a look at a 4 year period.
While NIFTY gained 69.71% from October 24, 2017 to September 03, 2021, it did not make PSU Bank stocks go higher.
11 out of 12 are losers. The loss being more than 70% in two cases.
The best among them. SBIN has just about matched the index gain.
Index up 70% and stocks down 70%.
That is wealth destruction at its worst.
The date October 24, 2017 is significant as a big recapitalization was announced on that day by then Finance Minister, Arun Jaitley.
Next day all the stocks had shot up. We can see those numbers in October 25 Column.
I am being charitable to these banks by not comparing with the prices on that day.
Over last 3 months, NIFTY has surged ahead.
We can see the numbers of July 09 and September 23 and find that with the exception of CANBK and SBIN lost out in this period while NIFTY moved higher by 10.41%.
These stocks did not move up when index gained 69%. What can a meagre 10% NIFTY gain do to them.
If we look at 5 years and 10 years numbers, we can find more horrors.
PSU Banks are an ABSOLUTE AVOID.
Investing in PSU Bank stocks is one sure way of wealth destruction.
Readers’ comments are welcome.