How has banking sector performed good despite the pandemic and lockdowns in the country?

Short Answer

It was all thanks to increased lending, the growth in the economy, digitalization that helped in the growth of the banking sector. Furthermore, banks did run with 50% of their capacity during the lockdowns to help facilitate digitalization and reduce the usage of physical currency.

Detailed Answer

The stock primarily has several indices such as Nifty50, Nifty Bank, Nifty FMCG and so on. These are a culmination of the top-performing companies in that sector. Keeping tabs on these charts should help understand the trend in the market and how the indices might travel in the future.

But then, when the pandemic hit the country, and the country went under a lockdown for months, it was where every sector was severely hit. No doubt, the impact did chop off several points of all the indices, but the banking sector did recover incredibly in a shorter period.

Factors propelling the banking sector on a bull run:

What was the reason behind it? How did it perform this good? Let’s find out.

• Digitalization

Before the covid impact hit the banking sector, digitalization in banks was slow and steady. This is because there was not enough importance given. However, after the covid impact, things took a turn for good where a greater stride in digitalizing the bank sector came into effect. It’s where the banking sector strengthened its stronghold over, using technology and leaving traditional methods behind.

Furthermore, contactless payments such as payment applications like GPay, PhonePe, Paytm did proper transactions and huge change in the way people shopped for things.

• Growth in the economy

Soon after the pandemic hit the country, with lockdowns and other things in place, the economy contracted vastly and affected millions. However, with the lockdown processes and banks running throughout the pandemic with limited staff quarters, it did help other industries and companies thrive while benefiting itself.

With a sharp rise in the economy in a year, the operations of banks increased, and the demand for things rose. In turn, causing the banks to remain functional and operational even during tough times while reporting massive amounts of net revenue.

• Increased lending

With increased loans and great offers during the pandemic, banks gave out many loans and services. However, the return was also massive as banks reported massive profits and net revenue from these practices. Moreover, through the circulation of money in the country and several other smaller taxes and charges, banks did get huge returns, which helped boost the overall Nifty bank sector in an uptrend direction.

Bottom line

There is denying that the impact of COVID-19 is quite evident even to date despite hitting the market back in March 2020. Nevertheless, things are looking better and might as well be a bull run for quite some time.

However, the banking sector would remain on a bullish run provided everything favors its growth. If there is any correction in the market, it might vary based on the growth and the impact that has caused the correction to happen.

Tagged With: banking secotrnifty bankdigitalizationincreased lending
Categories: Finance
Ask your query and our expert community would be happy to help
Discussion (0)
Related FAQs

Can I buy 1 share of Nifty or Bank-Nifty?

Nifty is an index comprising of the top 50 companies in terms of the market capitalization of the NSE (National Stock Exchange). Bank Nifty, on the other hand, comprises 12 top banking stocks of the NSE. These indices are an attractive option for investors as they track the performance of the most valuable companies of the NSE. Know if you can purchase one share in these indices.

Do you think NIFTY would break the 15,000 mark and reach 16000 mark this financial year?

Breaking the 16,000 points from 15,000 points seems impossible. But, then with constant efforts in curbing the pandemic, normalization in the country, and easing of lockdowns, you never really know what might happen six months down the line.

How much money do you need to open a savings bank account in India?

To open a savings bank account in a private bank, you will have to make an initial deposit of around Rs 5,000 to Rs 10,000. However, there are some public-sector banks and other online banks where you can open your account without any deposit and get all the banking facilities.

Which bank is safest in India?

You can choose any bank in India to open an account in, be it a private-sector bank or a public-sector bank. By the market share SBI, HDFC, and ICICI Bank are the three top banks that can be considered when looking at the largest banks in India.

Can I apply more than one IPO application in my name from different saving bank accounts in same bank or different banks?

Only one PAN card can be used for one application. No matter how many different savings account details you might utilize, if there is the same PAN number in more than two applications, then all of them would be revoked.

How are the top companies in Nifty and Sensex decided?

Nifty and Sensex play a major role in the economy of the country as they list the best performing companies among all. There are various criteria that are necessary to be under Nifty and Sensex Index such as Liquidity, Market Capitalization, etc.

How many IPO applications can I submit through online net banking from one bank account?

There are about 5 IPO applications that can submit through online net banking from one bank account. However, the number can change immensely from one bank to another.

What is Sensex and Nifty in share market?

Nifty and Sensex and two stock market index given to the top performing, financially established and stable companies where most of the individuals prefer investing.

Which is better investing in equity, mutual funds, or keeping money in banks?

Equity and mutual funds are perfect if you want to invest in companies while seeing your money grow in a short period. Moreover, the chances of compounding your investments are higher. But the risk associated is equally greater considering the growth of companies and their performance in offering returns. But then keeping money in the bank is the safest way to keep your earnings. But then, due to inflation and low returns on interest, that value of the money kept might be cut down drastically.

How did Adani become hot stock that grew exponentially during lockdown?

Adani has greatly diversified its involvements from not only in ports but then in running airports, energy sectors, and warehousing activities as well. As a result, it has been one of the greatest attributions towards its massive growth in the country in 2020.