Bank Stocks Outlook for the week – 11 to 15.01.2016
(To
track Oct-Dec earnings, domestic data)
( www.rupeedesk.in )
Bank
stocks will take cues from the financial results for the December
quarter,
with a clutch of lenders set to begin announcing earnings next
week.
Private lenders IndusInd Bank, Federal Bank, and DCB Bank will
set
the ball rolling on Tuesday, with Karur Vysya Bank following on
Wednesday.
Public
sector banks are expected to be laggards on account of their poorer
performance
on the asset quality front as compared to their private peers.
RBI's
tough stance to clean up the balance sheet by March 2017 is likely
to
weigh on banks' earnings. In our view, RBI exercise will result in
earnings
cut - quantum difficult to ascertain due to lack of clarity. We
have
cut FY16 (2015-16) earnings by 5-10% for large banks by
increasing
the credit cost. Also on the horizon are key domestic data
points.
After
having come in at a five-year high of 9.8% in October largely
due
to a favourable base effect industrial growth is expected to decline
in
November. India's industrial production likely expanded 5.4% in
November.
Though October's increase was largely due to base effects,
conditions
are on the mend in India.
On
the inflation front, headline retail inflation may rise again in
December
from November's 14-month-high reading of 5.41%, although
the
Reserve Bank of India's target of keeping Consumer Price Index
inflation
below 6% in January is widely seen to be a formality at this
stage.
Index of industrial production, and retail inflation data, are
scheduled
for release on Tuesday.