Bank Stocks Outlook for the week - 09 to 13.05.2016 Trade seen positive next week; CPI, earnings eyed

Bank Stocks Outlook for the week - 09 to 13.05.2016
Trade seen positive next week; CPI, earnings eyed

Bank stocks are seen trading with a positive bias next week, amid a deluge of quarterly earnings and economic data. On Thursday, the Central Statistics Office will announce data on Consumer Price
Index-based inflation for April, with the figure having come in at a six-month low of 4.83% in March.
With the Reserve Bank of India having cut the repo rate by 25 basis points on Apr 5, eyes are now
on the central bank's next rate cut, keeping in mind its March 2017 target of reducing headline retail
inflation to 5%. The CSO will also detail industrial growth numbers for March on Thursday.

After three consecutive months in the red, industrial production rose 2.0% in February. On the
earnings front, next week will see the first set of Jan-Mar numbers from some of the larger public
sector lenders, with Bank of Baroda and Central Bank of India slated to announce their numbers on
Friday. Asset quality deterioration, as well as the RBI's review of bad loans, may continue to drive
bottom lines down. For Oct-Dec, the two state-owned banks had reported a combined net loss of
over 40 bln rupees.

The tone, however, will be set by Kotak Mahindra Bank and Oriental Bank of Commerce on
Wednesday. After the Jan-Mar numbers of private lenders Axis Bank and ICICI Bank disappointed,
following concern about their non-performing asset ratios and the heightened potential for further
slippages in the coming quarter, Kotak Mahindra Bank's earnings will be keenly eyed. Oriental Bank
of Commerce, on the other hand, had posted a 4.2-bln-rupee loss in Oct-Dec. YES Bank could continue to outperform, as valuations adjusted for dilution at 1.74x March 2018F (2018 forecast) book are still undemanding. Other banks announcing Jan-Mar results next week include Punjab & Sind Bank, South Indian Bank, Indian Bank, Bank of Maharashtra, UCO Bank, Allahabad Bank, and Vijaya Bank.