GOLDEN RULES FOR TRADING

Bank Stocks Outlook for the week – 01 to 05.08.2016 (Positive trend eyeing broad market, GST bill)

Bank Stocks Outlook for the week – 01 to 05.08.2016
(Positive trend eyeing broad market, GST bill)

Bank stocks may trade with a positive bias next week tracking cues from the broad market which is
focussed on possible passage of the much delayed Goods and Services Tax in Parliament. The trend is positive, and unless there is any adverse development on the GST front, the broad market and bank stocks will move higher. The passage of GST will be seen as the government finally getting into consensus mode with opposition for passage of key legislation.

The government has listed the Constitution amendment bill to facilitate the rollout of the Goods and
Services Tax for consideration and passage in the Rajya Sabha in the coming week. Additionally,
quoting a Congress source. Passage of the long delayed GST bill will push broad equity markets,
including bank stocks, higher.

Indian Bank is the only key lender which will report Apr-Jun earnings in the coming week on
Tuesday. We feel the outperformance in banking stocks is likely to continue unless any negative
trigger comes from quarterly numbers, which will help the price ratio to inch higher.

Waves Strategy Advisors in its technical note point out that unlike other state-owned bank stocks such as Punjab National Bank and Bank of India which have consolidated after rising sharply, State Bank of India is moving in a 222-235 rupee band with a potential for breakout in either direction.