Synopsis
When you look at the banking sector, it is not just about excel sheets. It is about the ability to differentiate between the white, black, and grey in terms of the businesses that banks finance. Today, a bank financing exporters faces more uncertainty than one giving loans to domestically-focused companies. But what happens to the latter if there is tariff-induced dumping by China? That is why the colour grey. Whom to lend to and whom not to. When to lend and when not to. That’s the dilemma faced by bankers. Banks with the ability to handle this dilemma will do well.
It is after a long time that banking stocks are leading a market rally. More importantly, the rally is being led by both private and public sector banks of different sizes with exposure to different kinds of loan books. Whether it is HDFC or SBI, which have very different kinds of loan books, both are moving upward. Why is this significant? Because there are two sectors which are critical and are able to give some indication of what is possibly
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