Bank Stocks
Outlook for the week – 02 to 06.02.2015
( www.rupeedesk.in )
Bank stocks are expected to trade
with a negative bias next week. Bank stocks slumped up to
11% after two big lenders--ICICI
Bank and Bank of Baroda--reported weak earnings for Oct-
Dec, primarily due to asset
quality stress.
We expect other big banks such as
Punjab National Bank to also report weak Oct-Dec earnings
on account of asset quality
deterioration. However, overall sentiment in banks continues to be
positive and the coming week
remains a good opportunity to buy, with the economy expected to
pick up in the coming quarters
given the expected easing in interest rates by the Reserve Bank of
India.
BOB (Bank of Baroda) follows a
few other large PSUs (Public Sector Undertakings) in reporting
large NPL (non-performing loan)
hits. Our preference remains for private banks like Axis, ICICI
and HDFC Bank
RBI's sixth bimonthly policy
statement for 2014-15 (Apr-Mar) on Tuesday will be the next
trigger for the market and
another surprise repo rate cut would boost bank stocks.
Meanwhile, stock-specific
activity is expected to continue, with Indian Bank, Punjab National
Bank, Canara Bank, Central Bank
of India, Allahabad Bank, among others, scheduled to detail their Oct-Dec results next week.
