Nifty Bank is the Banking Index of India and it has rallied over 5000 points from 17600 to 22600 which is almost 28 % in Last 5 Months which is a very strange situation as the NPA Crisis in India is worsening everyday, Official Data shows about 8.6% of total advances are Non Performing but in reality it could be much worse and higher then 16% which will put India in top 3 worst bad debt situation countries with Greece and Ukraine who have over 30% non performing loans.. but Total Value of Advances in India is much more which will make India worst bad debt situation country. but it is not only about the NPAs, Indian Economy and Global economy in General is not in very good shape, Major PSU Banks in India are in Losses and Credit Growth is Around 5.1% which is lowest in Years, Government is trying to take every step to get banks out of crisis, Biggest example is Recent Demonetization where government took out 500 and 1000 rupee Currencies out of legal tender, and asked people to deposit all their cash into Banks, it was presented as if it was done to reduce corruption, fake currency and terrorism, but in reality there was only one motive, To Save Indian Banks from crisis as banks are starved of capital. Government re -monetized entire system with new 500 and 2000 rupee notes again creating the same problems of fake currency, corruption and terrorism, but the real motive was fulfilled, Banks got huge amount of deposits almost Rupees 15-16 Trillion. Now Banks can lend out more and RBI is also helping banks passively to increase profits like by Increasing Reverse Repo Rate. But in my opinion it is too late this crisis can not be averted, Reality will strike the market, but why is Banking Index and bank stocks rising non-stop right now?, in 2013 when the issue started creep up, banking stocks fell almost 40% and again in 2015 after new government was elected and the issue was not looking to cool down market again fell 35% and since 2013 the problem is much worse and there is a big difference between official numbers of bad loans and real numbers, which has started to come out now as recently a news hit the market that banks are under reporting NPAs first 1 was yes bank which was believed to be the one of most stable banks with less then 1% GNPA Ratio, but after news came the stock fell almost 15% in a week reflecting market can not ignore NPA issue as it is trying to do for last 6 months. Indian Mutual Funds are getting huge inflows and they are investing a lot in the stock market which is also fueling the rally government is trying its best to flood the market with Good News as they changed base year for GDP estimate, Inflation and other data like IIP because of which Indian GDP looks to be growing at 7.6% , CPI seems very low IIP growth is good but in reality according to previous calculation formula Indian GDP growth is below 6%, CPI should be higher and IIP was reported negative in previous quarter. Clearly their is very clever index management going on by mutual funds and government, market is working on a Greater Fool Theory and they are trying to create wealth effect in the economy so inflows keep coming in.
But till now it was all about fundamentals but even technically Nifty Bank Index has started to form really scary reversal patterns on higher time frame charts, there are many upper channel trend lines coinciding around 23000 level and there is a serious gap around 8000-7800 levels that was made in late 2013 when nifty bank initially started rising (its an other way by which i calculate gaps) which needs to be filled.
So in Conclusion i think fundamentals are terrible and technical have started to get terrible in Nifty Bank index and i believe that a crash in Nifty Bank index is imminent and it could be a 60-70% fall and it could happen sooner then anyone can think and we will see Nifty Bank again in four digits.
I have also made a video in detail -