Nifty Bank hits 57,000. Is it time for mutual fund investors to bet on banking funds?
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With Nifty Bank crossing the 57,000 mark to hit 57,049 on Monday, a market expert mentioned that the recent rally has been fueled by robust earnings growth, improved asset quality, and attractive valuations in the banking sector. Banks are now seen as reasonably valued, offering a margin of safety for investors.'If you look at the numbers, the banking sector's Q4 consolidated net profit stood at a historically higher level. Notably, bank earnings contributed over a third of all listed companies' total profits. Furthermore, Net Non-Performing Assets (NNPA) are at historic lows,' Vishal Dhawan, CEO, Plan Ahead Wealth Advisors, a wealth management firm in Mumbai, shared with ETMutualFunds 'Tax and interest rate cuts are likely to boost consumption, credit demand is expected to rise. Higher consumption could drive stronger loan disbursements,' he added.The banking index closed at 56,839, down marginally by 0.37% from the day's high level. The Nifty Bank index has surged by 16.66% in the last three months, whereas it went up by 5.73% in the last six months.In the last year, the banking index has gained 13.60%, and in the current calendar year, it has gone up by 11.24%.Commenting on current allocations to banking and financial sector funds, the expert suggests that aggressive investors may consider a 5–10% exposure. However, they emphasise that diversified equity funds remain a more resilient choice for most investors, given their broader exposure across sectors, market capitalisations, and geographies, which helps mitigate market volatility.'For aggressive investors, one can take exposure to thematic funds from 5% to 10%. That's because themes are cyclical and very hard to time correctly; getting in or out at the wrong moment could significantly impact the entire portfolio,' Dhawan told ETMutualFunds.'Diversified equity funds, by contrast, are much better at weathering market swings due to their broader exposure across different sectors, market caps, and geographies. Remember, diversification is key for long-term growth,' he adds.There are around 21 actively managed mutual funds focused on the banking and financial services sector, which have delivered an average return of 10.67% so far in the current calendar year — the only category to post double-digit gains during this period.DSP Banking & Financial Services Fund offered the highest return of around 14.07% in 2025 so far. Helios Financial Services Fund offered the lowest return of around 6.68% in the same defined period.On the passive side, 20 funds benchmarked to the Nifty Bank index delivered an average return of 11.22% so far this calendar year. Among them, the UTI Nifty Bank ETF posted the highest return at 11.39%, while the Bandhan Nifty Bank Index Fund recorded the lowest at around 10.90%.While choosing between active or passive funds focused on the banking sector, Dhawan recommends opting for an active fund, citing the fund manager's ability to navigate market cycles and selectively allocate to high-conviction banking and financial stocks as a key advantage over passive strategies.'The Bank Nifty largely comprises private and public sector banks. This means it offers little to other important financial sectors like insurance companies and Non-Banking Financial Companies (NBFCs). If you rely only on the Bank Nifty to represent the entire financial sector, you could miss out on opportunities that may emerge from other financial sectors, like insurance or NBFCs, that may offer better fundamentals. Thus, an active fund may be preferred,' Dhawan shared with ETMutualFunds.According to a report by ETMarkets, high-weighted financials and private banks led the gains on Monday, lifting the Bank Nifty to a record high of 57,049.50 — its first-ever close above the 57,000 mark — as investors welcomed the Reserve Bank of India 's surprise rate cut and a shift to a neutral policy stance aimed at boosting credit growth and bank profitability.The Reserve Bank of India on Friday slashed the repo rate by 50 basis points to 5.5% and gave a 100 basis point CRR cut, to which Dhawan expects that this aims to boost liquidity and support growth and banks may face short-term margin pressure, as lending rates fall faster than deposit rates adjust and also margins (NIMs) may bottom out in Q2FY26, with recovery expected as deposit rates decline gradually.'Liquidity infusion from the CRR cut (Rs 2.5 trillion) will lower funding costs and boost loan growth. Overall, the outlook remains stable to positive for well-managed banks,' Dhawan further stated.One should always invest based on their risk appetite, investment horizon, and goals.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@timesinternet.in alongwith your age, risk profile, and Twitter handle
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In all stocks except HDFC Bank, Jane Street 'contributed 15–25% of the entire market's traded value — a remarkably dominant share/concentration.' For perspective, the next highest participant's concentration was only 8.09%, compared to Jane Street's 23.21% in Kotak Mahindra here's the masterstroke: while artificially propping up the index through massive buying, Jane Street simultaneously built 'effectively Rs 32,114.96 crore of bearish positions in the much more liquid Nifty Bank index options by buying cheap Put options and selling expensive Call options.'The artificial support created perfect conditions for Jane Street to enter options trades at favorable prices, with other market participants misled by the inflated index granular analysis of the first eight minutes (9:15 AM to 9:22 AM) shows the surgical precision of Jane Street's manipulation. During this brief window, the firm purchased Rs 572 crore worth of stocks and futures in six major Nifty Bank impact was immediate and dramatic. 'The Nifty Bank index moved significantly from 46,573.93 to 47,176.97 during this patch, a rise of over 600 points.' At the same time, Jane Street had created 'effective cash-equivalent short Nifty Bank exposure of Rs 8,751 crore' — over 15 times their Rs 572 crore position in cash and the afternoon, Jane Street executed the second phase with equal aggression. The firm 'reversed and dumped the morning's purchases, and net sold Nifty Bank component stocks, stock/index futures to the tune of Rs 5,372.12 crore.'The result was predictable: 'The resultant downward pressure on Nifty Bank at expiry allowed JS Group to profit immensely from their outstanding net short cash-equivalent positions in the Nifty Bank index options segment.'Jane Street booked a deliberate trading loss of Rs 61.6 crore in cash and futures but made a profit of Rs 734.93 crore in Nifty Bank index options — a return ratio of nearly 12:1.'What sets apart the trading pattern of the JS Group as described above as prima facie being manipulative is the intensity and sheer scale of their intervention in the underlying component stock and futures markets, the rapid reversal of these large and aggressive trades in cash and futures without any plausible economic rationale — other than the concurrent activity in and impact on their positions in the Nifty Bank index options markets.'The regulator emphasized that 'there is little or no economic rationale to justify such large and aggressive intraday trading activity in stocks and futures on a standalone basis. In fact, given the sheer size, aggression, manner of trading, and transaction costs involved, standalone, such activities could more often than not end with net trading losses.'This wasn't a one-off incident. Across 15 analyzed days, Jane Street 'booked a total intraday trading loss of Rs 199.7 crore in their activities in the Nifty Bank constituent cash stocks and futures markets,' while earning profits of Rs 4,474 crore in Nifty Bank index concluded that the 'demonstrably large and aggressive trading behaviour of JS Group in the Nifty Bank constituent stocks and futures had little standalone economic rationale, other than to manipulate the prices of securities and benchmarks, to mislead, entice, or cause loss to participants in the index options markets.'Perhaps the most damning evidence was Jane Street's systematic approach to incurring losses. Sebi noted that 'incurring losses in cash and futures markets in a deliberate and systematic manner is itself unusual and indicative of fraud.'These losses, the regulator found, were 'incurred as part of the manipulative device to influence the benchmark indices and profit from the positions taken in the index options,' making them integral to the scheme rather than legitimate trading investigation revealed a sophisticated manipulation scheme where Jane Street weaponised deliberate losses in some segments to generate exponentially larger profits in others. The strategy represents one of the most complex cases of market manipulation ever documented in Indian financial Rs 35,602 crore net profit stands as a stark testimony to the effectiveness of Jane Street's strategy — even as it highlights the vulnerability of Indian markets to highly coordinated, well-funded, and systematically executed manipulation by global players.
