Bank Stocks Outlook fort the week – 18 to 22.05.2015
(Positive
bias next week; SBI earnings in focus)
( www.rupeedesk.in )
Bank
stocks are expected to trade with a positive bias and continue to outperform
the broad market amid expectation of a pre-policy rate cut by the Reserve Bank
of India next week. The Jan-Mar earnings of the country's largest lender--State
Bank of India--scheduled on May 22, will be a key focus next week. Overall, the
trend continues to look positive as several banks have shown quarterly improvement
in their asset quality in Jan-Mar. The market is expecting a rate cut action
even before the policy due date. Any such announcement mid-week will pull up
bank stocks.
Despite
the next RBI bi-monthly policy statement being due on Jun 2, the market is
abuzz with expectations of an inter-policy rate action next week post benign
inflations numbers.
Data
released by the commerce and industry ministry on Thursday showed that India's
Wholesale Price Index inflation rate fell to a record low of (-)2.65% in April,
staying negative for the sixth consecutive month, strengthened expectations of
a repo rate cut by the Reserve Bank of India in the upcoming policy review.
Allahabad
Bank posted a 28.5% year-on-year rise in net profit to 2.03 bln rupees for
Jan-Mar, led by robust treasury operations. Amid a difficult operating
environment, the bank has delivered strong performance, increasing divergence
to its peers. Its retail franchise build-up has been rapid and aided profitability.
We increase EPS (earnings per share) by 2%.
