Bank Stocks Outlook for the week – 14 to 18.12.2015
(Seen
weak eyeing US Fed rate decision next week)
Bank
stocks are likely to trade with a negative bias in the coming week, with
stocks
of lenders being especially susceptible ahead of the expected hike in
rates
by the US Federal Reserve.
The
US Federal Reserve's Federal Open Market Committee will meet over Dec
15-16
to decide whether it should raise federal funds rates for the first time in
nearly
a decade. Yesterday, spoken to the press after the board meet, the
Reserve
Bank of India Governor Raghuram Rajan said there was a 70-75%
probability
of a Fed rate hike next week. Rajan said he expected the Fed to hike
interest
rates by 25 basis points but added that the RBI was prepared for "any
eventuality."
The
report notes that sentiment for bank stocks has become muted as stateowned
bank
scrips, which had seen some buying in November, have given
up
gains, even as weakness continued in private bank stocks. Bank stocks will
also
track cues from the broad market, which will find solace in the strong
Index
of Industrial Production growth for October.
The
October IIP numbers look positive, but there will be some scepticism of
these
as it is sharply higher from month-ago levels. Markets are likely to treat
the
numbers with caution. India's industrial growth rose to an over five-year
high
of 9.8% in October from 3.8% a month ago, primarily driven by high
double-digit
growth in the capital and consumer goods sectors.
The
statistical effect of a low base also helped push up the growth, as industrial
output
had contracted 2.7% in October last year. The latest print of the Index of
Industrial
Production marks the highest growth in India's industrial output since
October
2010, when it had risen 11.3%.