NSE Symbol: SBIN | BSE Code: 500112
SBI is the largest public-sector lending bank. The stock prices of SBI are booming lately, but the bank keeps incurring losses. The reason for the ever-increasing stock prices and a large number of Non-Performing Assets(NPS) which result in a high level of loss is bad loans. The Chairman of State Bank of India, Rajnish Kumar targets the SBI share price to go up by 2020 and plans on reducing the amount of NPA down to 6% by then. This optimistic view also comes from the fact that the SBI share price has been shooting up irrespective of the bottlenecks faced by the bank.
PE or Price-Earnings Ratio is one of the widely used factors for screening the stocks. If the PE ratio of a bank is high, the investors will anticipate higher returns and hence end up pitching more into the stock. PE ratio is the money that the investors are willing to pay for each rupee of earning with the company. High PE ratio indicates that the investors anticipate positive earnings from the stock. However, a high PE ratio doesn't necessarily indicate that the earnings from the particular stock will be high. A high PE ratio can also be a result of over-valuation of the stock.
SBI's average PE Ratio in 2016 was 14.4. But it plummeted to 761.8 in 2017 and finally, the average PE ratio crashed down to -56.0 at the end of March 2018. The radical trend in PE Ratio shows that the SBI stocks are highly volatile in terms of market anticipation.
A negative PE ratio indicates that the company has negative earnings.
Along with a negative PE ratio, SBI has large NPA which keeps multiplying by the year. This could be attributed to the poor micro and macro management of the bank. High Non-Performing Assets could reduce investors faith in the company; this could lead to poor performance of the stocks.
There's been a drastic increase in the total provisions of SBI. Even if the company manages to incur higher net profits, large provisions would always demotivate the investors.
If we follow the trend from the past five years, SBI stocks haven't been quite impressive compared to private banks. There are chances that SBI stock would crash dramatically in the coming years. So, it's better to invest in private banks' stocks with have a better PE ratio and relatively lower NPA.
State Bank of India is a financial institution known for an extensive range of financial products such as home loans, student loans, life insurance etc. It is a public-sector bank of India and owned by Government of India. It's spread across the globe with 190 offices in 36 countries. In 2016, SBI was a part of the Fortune 500 list. About one-fourth of the loans and deposits are held by the State Bank of India.
Shares of SBI can be purchased from NSE(National Stock Exchange) and BSE(Bombay Stock Exchange) in India. Details regarding the stock price, PE ratio, previous closings and other metrics that could help in judging the SBI stock can be found on BSE and NSE-India website. SBI stocks are also listed on the London Stock Exchange. SBI is also listed on the Benchmark Indices of India like BSE Sensex and Nifty.
Investing in the stock market requires you to have the accurate knowledge of the trends and a lot of research has to be done to infer the best stock where you can invest. It's easier to invest in mutual funds since such investments do not require you to have a vast knowledge of the market. Also, compared to stocks, mutual funds involve a substantially lower level of risk. If you're risk-averse and have less time to spare to learn the tactics of the stock market, then we suggest you to invest in mutual funds.
It is important to note that the opinion presented in this post is just an observation of the market trends and cannot be considered as professional advice.
The BSE or the Bombay Stock Exchange is Asia's oldest and first stock exchange. It is located in Mumbai, erstwhile Bombay, and it was formally established in 1875. An influential stockbroker and a businessman, Premchand Roychand, along with a handful of acquaintances, started the BSE journey in 1855. The BSE had its meetings under Banyan trees in its initial days. The group grew and eventually moved to a permanent place in 1874. BSEâ€™s office is very appropriately named â€˜Dalal Streetâ€™ which translated to Broker Street in Hindi. BSE operated as a floor trading exchange for a long time before ascending the digital ladder in 1995. They implemented an automated trading platform which had a capacity of 8 million per day. BSE went global in 2012, by joining the United Nations Sustainable Stock Exchange as a partner. Subsequently, in 2016, BSE established the first international exchange of India, called INX.
With an aim to induce transparency to the Indian capital market, the Indian Government implored a group of leading financial institutions for an effective solution. Accordingly, these financial institutions, along with the Government's support, established the first demutualized electronic exchange of India in 1992, known as the NSE. Since its inception, the NSE functioned on a totally automated screen-based digital trading system, which offered a great platform to connect the investor base of the entire country and offer them an easy trading facility. NSE was India's first electronic exchange and currently offers services pertaining to several segments, such as equity derivatives, clearing and settlement services in equity, trading, debt and currency derivatives, etc.
The NIFTY is National Stock Exchange of India's benchmark broad-based stock market index for the country's equity market. It lists 50 selected Indian companies across 12 sectors that own the largest and most liquid Indian securities. Hence, it is popularly called NIFTY 50. The Nifty index represents the weighted average of the stock value of those 50 companies. The India Index Services and Products or IISL, a company which is focused on an index as a core product, owns and manages the Nifty. Through one efficient portfolio, the Nifty exposes investment managers to the current status of the Indian market and helps in determining promising investment opportunities.
Similar to NSE's Nifty 50, BSE also has a stock market index known as Sensex. The word comes from the words 'Sensitive' and 'Index,' and is basically a portmanteau of the two. BSE 30 and S&P BSE SENSEX are two other names of this index. Sensex constitutes the top 30 financially flourishing and well-established companies from the ones listed on BSE. These companies typically represent diverse industrial sectors of the country's economy to ensure a holistic calculation. Usually, these are the companies that have the largest and most actively traded stocks. SENSEX is broadly reported through both print and electronic media in national as well as international markets. The scientifically designed indexing system is based on globally accepted construction and review methodologies. It is being calculated on the basis of a free-float market capitalization methodology since September 2003.