The DSP Nifty Bank Index Fund, an open-ended scheme that tracks the Nifty Bank Index, is launched by DSP Mutual Fund. Through a single fund, the fund provides investors with the chance to have exposure to the 12 largest and most liquid Indian banking stocks. The Nifty Bank Index is made up of both public and private sector banks, providing diversification.
In the past, the Nifty Bank Index has outperformed the larger Nifty 50 Index in terms of long-term returns. The Nifty Bank Index has increased by 67 times since January 2000, while the Nifty 50 has increased by 21 times during the same time frame.
But when it comes to sector valuations, both in comparison to other sectors and to their own historical averages, the Nifty Bank Index is currently seeing the longest period of underperformance when compared to the Nifty 50 on a rolling 5-year basis.
Important financial indicators for banks have also been steadily improving, such as capital adequacy and return ratios. Indian banks' return on assets (RoA) has increased by more than three times since 2018. Additionally, NPAs are among the lowest.
With NPAs currently at their multi-year lows and the sector trading at just a 5% premium to its 10-year average price-to-book multiple, it presents an alluring entry point for investors to profit from the banking industry's anticipated recovery.
Ghelani said, "A robust banking system is the key to economic growth and development, especially for a fast-growing country like India. At DSP, we endeavor to bring the right products at the right time to our investors.
The DSP Nifty Bank Index Fund is for investors with longer time horizons, especially based on the long-term performance of the Nifty Bank Index," said Anil Ghelani,Head,Passive Investments & Products, the DSP Mutual Fund.
