Bank Stocks Outlook for the week – 28.09.2015 to 01.10.2015
Bias
weak for PSUs next week despite rate cut hope
( www.rupeedesk.in )
Despite
expectations of a rate cut by the Reserve Bank of India at its policy review on
Tuesday, stocks of banks are expected to trade with a negative bias next week
tracking the broad market. However, private banking heavyweights are likely to
trade with a positive bias in the coming week, which would provide cushion to the
Bank Nifty.
Analysts
have been batting for private sector banks over their public sector peers, as
the latter have been reeling under far greater stress on the quality of assets
and capital constraints. Of the 40 economists, treasurers, bankers and fund
managers polled by Cogencis, 37 expect the central bank to cut the repo rate to
7.00% next week. The remaining three expect a status quo from the central bank.
The
RBI will detail its fourth bi-monthly monetary policy statement on Tuesday. A
lower repo rate is expected to boost credit growth and support banking stocks,
but most analysts believe the rate cut has already been priced in. Thursday,
the Bank Nifty closed at 17196.65, falling 1.2 over the week. The Bank Nifty is
likely to witness short covering ahead the October contract expiry. As Bank
Nifty futures were trading at a discount near 17000, and the short positions
taken before the US Federal Reserve's recent announcement "seem to have
got stuck", the declines in the banking index will be used by these
traders to exit short positions.
