Banks Will Lose Half Their Mkt Cap By Dec09

Inflation is being used as a ruse to cut interest rates by the joker at RBI. Common sense tells that low commodity prices which underline a recession are responsible for a lower inflation and not a supply side response. The very factors that built up a strong case for banks a mere six months ago could as easily reverse if the Global Economies begin growing. However, 30 years of zero interest rates have achieved nothing for Japan, and so far similar efforts in the US and Europe have failed.

"Money has a cost" is the idiom the guy at RBI needs to understand, throwing money at dead businesses will mean sizeable business losses in six months from now. It is already an open secret that all Bank NPA figures are fudged in India, but with sub 10 per cent PLRs this will become difficult to hide. Starting from SBI, PNB, BOB, BOI, HDFC, HDFC Bank and Kotak Bank could halve even from here. This is going to become the last sector to be crushed in the fall of CY2009.