Bank Stocks Outlook for the week – 28.12.2015 to 01.01.2016
Seen
weak on F&O rollovers; NPA woes to weigh
( www.rupeedesk.in )
Bank
stocks are likely to trade with a weak bias next week in volatile trade due to
rollover
of positions to January futures and options contracts ahead of the expiry of
December
series. However, volatility is expected to remain low as investor
participation
will be muted due to year-end holidays. While broader market indices
are
seen trading in a narrow range with a positive bias, banks are likely to move
in the
opposite
direction.
Analysts
said that concerns outlined in the December Financial Stability Report
published
by the Reserve Bank of India on Wednesday has reinforced the view that
asset
quality stress, especially for public sector banks, is unlikely to subside in
the
near
future. The report said that Indian banks' gross non-performing assets ratio
could
rise
to 5.4% by September 2016 from 5.1% as on Sep 30 under the baseline. Gross
bad
loan ratio could rise to around 6.9% by March 2017 under a severe stress
scenario.
While the underlying bias in stocks of state-owned banks is likely to remain
weak,
cherry picking of stocks of fundamentally sound banks may limit losses in the
Nifty
Bank.