Rise of banking sector in India

During the last 5 years, Indian benchmark index SENSEX has grown by about 350% however there are a couple of indices that have outperformed the benchmark as well as the highly celebrated IT sector. In order to compare the relative performance of different indices in India, I chose 4 indices.

SENSEX - Benchmark index
BSE-IT - It comprises all the IT stocks and private companies dominate in this index
BSE-PSU - It comprises all PSU stocks and public companies dominate in this index
BSE-BANKEX - It comprises all bank stocks and financial institution stocks. Both public and private companies comprise this index


Source - Bombay Stock Exchange India

We can see that BSE-PSU and BANKEX have outperformed the other two indices during the last 5 years. Though BSE-PSU has outperformed BANKEX for most of the period we also need to understand that PSUs are closely regulated by government and rising crude oil prices have played their part too. However banking sector has grown despite government regulations.
Though a large number of foreign investors have invested in financial services during the last two years, I believe that banking and financial sector will grow further given the overdue deregulation of banking sector next year.