The ongoing banking sector crisis caught all of us off guard. Since the banking sector is one of the highest weighted sectors in many benchmark indices, are mutual funds safe from the crisis? Sohini Andani, fund manager at SBI Funds Management Ltd, tells us that a crisis for one set of banks is an opportunity for another set of banks. Edited excerpts:
What are your expectations from corporate earnings in financial years 2018-19 and 2019-20?
Few sectors like automobiles did good. Consumer goods, information technology did reasonably well; nothing spectacular but no negative surprise and they delivered on the expectations. The big disappointment was the banking and financial sector.
Going forward, we will see more disappointments in the banking and financial space; be it private or public sector banks, especially those that lend significantly to the corporate sector. The sector is under greater regulatory scrutiny now, so we don’t know what can be unearthed. Earlier, the pool of assets were identified through the Reserve Bank of India’s Asset Quality Review program, so banks had to just provision for them. Hence, the pool wasn’t getting bigger.
