Bank Stocks Outlook for the week – 23 to 27.11.2015
Weak
tracking broad markets ahead of F&O expiry Thursday
Bank
stocks are seen trading weak in line with broad equity markets ahead of
November
futures
and options contracts expiry on Thursday, with trend expected to be volatile
due
to
the truncated trading week. Equity markets are closed on Wednesday on account
of
Guru
Nanak Jayanti. Private sector banks dragged down the banking index this week,
and
it
was just firming up of some state-owned bank stocks and IndusInd Bank that
helped
the
index recover.
Sector
heavyweight HDFC Bank has ended near its crucial hurdle of 1070 levels.
Crossover
of these levels could pull the banking index towards 17400-17500 in the
expiry
week. In the options segment, the Bank Nifty's recent put concentration is seen
around
16800. Asset quality issues and moderate business growth will continue to weigh
on
bank stocks.
Decline
in base rates is likely to lower interest rate margins as yields on assets
re-price
more
quickly than the cost of fund. Decline in G-sec (government securities) yields
following
RBI's earlier decision to frontload repo rate cut had revived hopes of
significant
trading profits. However, recent steepening in the yield curve has nullified
such
expectations.