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Bank stocks are likely to trade with positive bias in the coming week on likely short covering as most have bottomed out. After the recent underperformance, most PSU (public sector) banks are trading below their historic low valuations. We believe the time is right to invest in them. Stocks of private sector banks are seen performing better than their public sector peers as deteriorating asset quality and sluggish credit pick-up continue to weigh on the latter. Going ahead, this trend is likely to continue.
IndusInd Bank and South Indian Bank will be in focus as they are scheduled to detail their Apr-Jun results on Wednesday and Jul 12, respectively. Canara Bank is likely to be in focus as the bank has cut its Base Rate by 30 basis points to 9.95%, effective Monday. Other state-owned banks will also be in focus after Finance Minister P. Chidambaram Wednesday asked them to look at cutting their base rate to boost the economy. Movement of the rupee against the dollar will also give cues on shares of banks giving loans to export-linked sectors.
Bank stocks are likely to trade with positive bias in the coming week on likely short covering as most have bottomed out. After the recent underperformance, most PSU (public sector) banks are trading below their historic low valuations. We believe the time is right to invest in them. Stocks of private sector banks are seen performing better than their public sector peers as deteriorating asset quality and sluggish credit pick-up continue to weigh on the latter. Going ahead, this trend is likely to continue.
IndusInd Bank and South Indian Bank will be in focus as they are scheduled to detail their Apr-Jun results on Wednesday and Jul 12, respectively. Canara Bank is likely to be in focus as the bank has cut its Base Rate by 30 basis points to 9.95%, effective Monday. Other state-owned banks will also be in focus after Finance Minister P. Chidambaram Wednesday asked them to look at cutting their base rate to boost the economy. Movement of the rupee against the dollar will also give cues on shares of banks giving loans to export-linked sectors.
