Invest 5-10% in a banking sector fund

Ensure that mutual fund's portfolio includes all three players -private sector banks, public sector banks and NBFCs

Ever since the government announced its plan to recapitalise public sector banks (PSBs), their stocks have been on fire. The Nifty PSU Bank Index soared 35.53 per cent in the previous week. Here is a game plan for mutual fund investors to benefit from what the market perceives is to be a positive step both for PSBs and the economy. 

A timely boost: PSBs have been grappling with the problem of recognition of bad loans and provisioning for them for several years. These banks can now aggressively recognise these loans, take a provisioning hit on their profit and loss accounts