The global markets are witnessing a brief revival during the week primarily attributed to the internal memo issued by Citi CEO Vikram Pandit to its employees.
Off late Citibank had become a penny stock with 40% of it owned by US Government, however it has but all seems to have tide the storm and brought back the bank into shape.
In its internal memo, Pandit has laid strength on two factors - capital strength and earnings power, which can also be understood as Debt/Equity ratio and operating profit respectively.
According to the memo, Citi is expected to become the strongest capitalized U.S. bank and sale of certain of its divisions would add to its strength.
In addition for the first time since October 2007, the bank has delivered operational profit and continues to grow is business and remain the number one investment banker, thus signifying its inherent strength.
No wonder the stock has gained over 80% from its historical low of 99cent per share. But is it a good contrarian play, is anybody’s guess.
Can we apply the same revival quote for other beaten down sectors in Indian context and bet on them; I feel it would be a tad early to make a call.