Banking & Financial Sector: A Prime Investment Opportunity in the Next Credit Cycle
History has shown that banks tend to thrive during a credit upcycle . In the previous cycle from FY02 to FY07, the Nifty Bank Index multiplied 6X , significantly outperforming the Nifty 50 , which grew 4X . Given the current economic landscape, we believe India is at the early stages of the next credit cycle , making the Banking & Financial Sector an attractive investment opportunity. Why This Sector Looks Promising 1. We Are in the Early Stages of a Credit Growth Cycle The banking system has shown strong signs of recovery , positioning itself well for an upcoming loan growth cycle: Loan growth is accelerating , driven by the revival of the real estate sector and private sector capital spending . High bad loans are now behind us , reducing pressure on banks. Bank balance sheets are stronger , allowing for enhanced lending activity and financial stability. 2. Long-Term Growth Drivers Supporting the Sector Several structural factors make the banking & financial space...