Best bank of India - State bank of India

State bank of India. The largest nationalized bank of India. The price of this stock has come down significantly along with all the other stocks. But the price of this stock is very attractive now. At current market price of Rs 952, the stock trades at less than its expected FY09 book value of Rs 965 and at 7 times its trailing one-year earnings.

At this time, when the stock market looks like it has almost bottomed out its better to invest in large caps stocks and whats better than nationalized banks. Surely this is not a time to go with private banks as nobody would like to take the risk on taking a loan from them. However, for traders this may be a very good option. Banks like ICICI will give very good returns in a short time whenever the market is up and vice versa. For long term investors its better to invest in SBI.

SBI has grabbed the first mover advantage in reducing lending rates. Having pegged its home loan rates at 8 per cent for the first one year (loans less than Rs 20 lakhs), it also cut rates on SME, auto, farm and other loans.

Other state banks like SBM, SBT are being brought under the same umbrella SBI. This would further help the bank in the coming months. Decision to merge all these has already been taken and its a matter of time before it would be merged.