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Stocks of large banks are likely to trade with an upward bias in the coming five sessions on value buying, whereas mid- and small-sized banks will continue to witness selling pressure. However, the upside in large banks will be limited ahead of expiry of the June derivatives contracts on Thursday. We are upbeat on stocks of State Bank of India, HDFC Bank, Axis Bank, and ICICI Bank. There are too many variables including rupee, foreign investment interest, and government steps that are uncertain at the moment. Banks are affected by these as they are a barometer to the healthy of the economy. It is difficult to decipher a clear trend for the entire sector right now. Hopes of a 25-basis-point repo rate cut by the Reserve Bank of India at its Jul 30 policy review have been crashed by concerns over the depreciation of the rupee to an all-time low of 59.9700 a dollar on Thursday. A weak rupee exacerbates the risk of imported inflation and also has a detrimental impact on the country's already high current account deficit. However, focus on recoveries will offset pressure from slippages. Deliberate efforts towards conservative growth will help stabilise asset quality, though current level of stressed pool at 15% remains a key monitorable. Markets will also eye the developments at YES Bank's board meet scheduled on Jun 27, when it is expected to take up the board nomination of Shagun Kapur Gogia, daughter of founder-promoter late Ashok Kapur. The bank has become embroiled in a legal tangle after Ashok Kapur's wife moved the Bombay High Court to seek Gogia's nomination on the YES Bank board.
Stocks of large banks are likely to trade with an upward bias in the coming five sessions on value buying, whereas mid- and small-sized banks will continue to witness selling pressure. However, the upside in large banks will be limited ahead of expiry of the June derivatives contracts on Thursday. We are upbeat on stocks of State Bank of India, HDFC Bank, Axis Bank, and ICICI Bank. There are too many variables including rupee, foreign investment interest, and government steps that are uncertain at the moment. Banks are affected by these as they are a barometer to the healthy of the economy. It is difficult to decipher a clear trend for the entire sector right now. Hopes of a 25-basis-point repo rate cut by the Reserve Bank of India at its Jul 30 policy review have been crashed by concerns over the depreciation of the rupee to an all-time low of 59.9700 a dollar on Thursday. A weak rupee exacerbates the risk of imported inflation and also has a detrimental impact on the country's already high current account deficit. However, focus on recoveries will offset pressure from slippages. Deliberate efforts towards conservative growth will help stabilise asset quality, though current level of stressed pool at 15% remains a key monitorable. Markets will also eye the developments at YES Bank's board meet scheduled on Jun 27, when it is expected to take up the board nomination of Shagun Kapur Gogia, daughter of founder-promoter late Ashok Kapur. The bank has become embroiled in a legal tangle after Ashok Kapur's wife moved the Bombay High Court to seek Gogia's nomination on the YES Bank board.
