Every now and then, there is a particular sector in the market which finds fancy with investors – retail and institutional alike. Share prices of companies in that sector rises unidirectionally – and most, if not all, companies ride on the back of the industry leaders to see their market cap increase. Stocks goes up based on momentum more than on actual fundamentals. Investors make huge amounts of money if invested in these companies at the right time. And when the market gets its share of enjoyment from these stocks, the mood shifts to another sector and another set of companies. The performance of that particular sector is no longer the kind that was seen in the past.

A couple of years ago it was the Power sector which was in the limelight. Then came the telecom sector. After the spectacular rise and fall of Telecom stocks, there is a new sector which is now making rapid progress in the last couple of months. This is the Banking sector. Both public and private sector banks have seen their share prices rise like wildfire recently. This was further strengthened with SBI’s good results in the first quarter of 2010.

If we see the chart of Nifty and the Bank Nifty index for the last month, the difference is clearly seen. Given below are the 3-month and 1-month comparison of the Nifty vs Bank Nifty. Although the Bank Nifty has started its rise only in the last month, I’ve put the 3-month chart to show how much attractive it was a couple of months ago. That would have been the ideal time to enter the Bank Nifty (of course, this is all in hindsight)

As with telecom, I’m kind of late to catch on to the trend. It may be too late to enter good stocks in this sector – Bank of Baroda, HDFC Bank, UCO Bank and Yes Bank look good to me, but they are already trading above my buy price. So let’s wait until things cool down or we get a stronger recovery signal in the economy when it will be time to slowly get in to the market in bits and pieces.

PS. With this post, I’ve also created a new category called Financial Farziwada. Let me first explain the meaning of this word for all those not faimiliar with Hindi. The meaning of “farzi” is non-genuine in Urdu. So farziwada, means activities which are not genuine. The idea for the name of this category comes from a classmate of mine in IIT Madras, who was known for his investing skills. Even though he was from the industry, he knew that most of the so-called analysts and brokers are out to make their own money rather than genuinely advising retail investor. Moreover, finance is only playing with numbers, which in local parlance, translates to farziwada. This also means that you should not blindly believe what any financial analyst tells you even if “it is for your own good.”

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The latest news from my side. Household work has gone à la carte. The last maid-servant we had hired has left. It’s time to hire a new one. And as anyone who has negotiated for a maid-servant in Mumbai will testify, it is a damn difficult job. As expected, their rates are high. But what is more surprising is the level of detail they go into while negotiating. It is as if they have attended a session on Scientific Management at some IIM or so. They will give you a breakdown of each work and the amount of money they’ll take for it.

For instance, this is what the lady had to say while quoting her rates.

Rs 400 – Washing clothes (assuming 4 people)
Rs 600 – Washing utensils, drying them and placing them in the cupboard (400 for washing and 200 for drying)
Rs 400 -Jhaadu pocha.
Rs 400 – Dusting furniture (excluding windows)
Rs 200 – Cleaning windows.
Rs 200 – Cleaning bathrooms.

That works out to around Rs 2200 for a month’s worth of work. And oh yes, before I forget, here’s the clincher – the paid-leave clause. The lady is expected to take 2 days of leave per month. But if she doesn’t, you have to give her that two days’ worth of pay.

Wow, even I have never gone into such a level of detail during my salary negotiations. Maybe this is not a bad strategy to adopt. After this level of detail, you just don’t have any room left for negotiation. You pick what you want to get done, and do the rest yourself. Obviously the wife isn’t too thrilled about this.

Let’s see, hoping the previous maid resolves all her family problems and returns. Else it is time to tighten the purse strings and make some difficult choices.