PSU Banks: New Rave in Developed World

Monday, October 13, 2008

In coordinated action, the Finance Ministers of the G7 nations and the EU are taking equity stakes in their financial institutions. Although the announcements suggest a minority stake, the values are so low that a meaningful equity injection will lead to a majority stake in almost all cases. We know the effieciency level this model invariably produces. The outlook for survival may be better but it is not insurance of good health.

So, the Indian model of PSU banks and private banks existing side by side is being replicated in the western world. On Friday, when the markets tumbled world wide and in India, SBI went up in price!

The counter rally has started; as I said a few days ago, the rally could run up to 3800 or more if sufficent policy actions are announced and or enacted world wide. It is still only a rally in a bear market...we still have a long way to are some very, very, scary pictures. (click picture to enlarge).

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