GOLDEN RULES FOR TRADING

Bank Stocks Outlook for the week – 25 to 29.05.2015

Bank Stocks Outlook for the week – 25 to 29.05.2015
 Seen trading with negative bias next week
Post sector bellwether State Bank of India's earnings, stocks of banks, particularly state owned ones, are seen weak amid volatility next week. The May derivatives contract expires on Thursday, and trade in equities is likely to be volatile over the week as traders rollover their positions to the June series. Yesterday, SBI stocks jumped 5% intraday to hit a one-month high of 305 rupees as the bank reported a sequential fall in bad loans in Jan-Mar. The bank also beat Street estimates on the bottomline front, posting a net profit of 37.42 bln rupees against analysts' forecast of 36.72 bln rupees.


However, it erased gains to end at 282.45 rupees, 2.69% lower than Thursday's close. Stateowned banks followed SBI into the red. Bank of India, Federal Bank and Bank of Baroda ended down 1-2%. Bank Nifty ended down 0.4% at 18433.30 points. In the immediate term, banks - especially public sector banks - will perform poorly as SBI was a sentimentally strong result. In the long term we see SBI as a good stock as asset quality would improve with better macro environment. Private banking stocks are looking relatively better than their PSU counterparts. Stocks like YES Bank, Federal Bank and Axis Bank may witness upsides in the expiry week.