Bank Stocks Outlook for the week – 06 to 10.06.2016
(To eye RBI policy Tuesday; buying
seen in private banks)
( www.rupeedesk.in )
The Bank stocks are likely to trade on a cautious note ahead of
the Reserve Bank of India's bi-monthly monetary policy statement on Tuesday. The
central bank is expected to keep repo rate unchanged, Governor Raghuram Rajan's commentary
on banking sector's asset quality would be eyed. Markets will also eye
commentary from RBI's Rajan on the speculation surrounding his second-term at the helm
of the central bank, which is seen as a factor that can lead to knee-jerk reactions in
the banking space.
The RBI monetary policy in the coming week may infuse some
volatility in the banking stocks but select private banking stocks like Kotak Mahindra Bank
still look strong despite the recent surge in this space.
Since the RBI wants banks to clean up their books by March 2017,
more details would be looked for because banks are still guiding for further
slippages. In Jan-Mar, 14 public sector banks reported a combined loss of nearly 255 bln
rupees. The mounting losses are primarily due to increased provisioning as per the
RBI's asset quality review, which forced banks to
classify and recognise certain accounts as non-performing assets.
