Bank Stocks Outlook for the week (28.05.2012 - 01.06.2012) Bank stocks are expected to remain subdued in the coming week with investors keeping a close eye on rollovers in May futures and options on Thursday, looking for leads on market appetite for long positions in bank stocks. Although rollovers from May to June derivatives positions are expected in broad market led by Nifty, investors are seen cautious in rolling over bank stock positions. There is a concern that the Reserve bank of India's ability to reduce policy rates has been hindered by the petrol price hike, which is expected to fuel inflation levels and limit growth. Though we are cautious on bank stocks in general, cherry-picking of stocks has emerged with large private and state-owned banks turning out to be favourites due to their ability to tide over asset quality woes and provisioning requirements. Considering the recent sharp decline in the markets, the banking sector's valuations have become cheap. Even structurally stronger banks and those having a cyclically better asset quality profile and strong earnings trajectory are available at cheap valuations in our view.
Axis Bank, ICICI Bank among large private banks, Yes Bank among mid- sized banks, State Bank of India and Bank of Baroda among large state- owned banks and Syndicate Bank among mid-sized state-owned banks. Sharp sequential decline in gross slippages across segments in Jan-Mar is comforting. Though we conservatively build in higher credit costs, earnings CAGR is likely to remain strong at 25% over FY12-14. Continuous improvement in asset quality could lead to earnings upgrade. -- You received this message because you are subscribed to the Google Groups "Kences1- Rupeedesk" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/kences1?hl=en.
