Bank Stocks Outlook for the week – 21 to 25.09.2015 (Bias positive next week on RBI rate cut hopes)

Bank Stocks Outlook for the week – 21 to 25.09.2015

(Bias positive next week on RBI rate cut hopes)

 ( www.rupeedesk.in )

Bank stocks are expected to trade with a positive bias next week on expectation of a rate cut by the Reserve Bank of India. Short covering ahead of expiry of the September futures and options contracts on Thursday is likely to help these stocks.

The RBI will detail its fourth bi-monthly monetary policy statement on Sep 29. Hopes of a rate cut have been triggered, as the US Federal Reserve left federal funds rates unchanged at 0.00-0.25%, paving way for the interest rate difference between the two countries to remain as it was.

The US central bank's monetary policy committee, the Federal Open Market Committee, said it was "monitoring developments abroad", indicating that global economic developments were not being ignored.

Back home, short covering is expected not just in individual stocks, but also in the September futures of the Bank Nifty. The index, on yesterday ended at 17,409.15, up 444.30 points or 2.6% from the previous close.

After the Fed announcement, these short positions seem to have got stuck while declines in the banking index would be utilised by these short traders to exit short positions and that private banking heavyweights are likely to trade with a positive bias next week, providing cushion to the Bank Nifty. In specific stocks, have HDFC Bank, Axis Bank, and IndusInd Bank as its top picks