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Coming week, bank stocks will take cues from the Reserve Bank of India's first quarter review of its monetary policy on Tuesday. Given the recent steps taken by the RBI to curb volatility in the exchange rate, most participants believe the central bank will maintain status quo on interest rates. Repo liquidity is limited and tighter CRR (cash reserve ratio) compliance is effectively higher CRR. Hard to expect easier base rates from banks now. Recent RBI measures are likely to continue to put pressure on stocks from the banking sector. On Tuesday, the RBI caped each bank's borrowing limit from the Liquidity Adjustment Facility to 0.5% of each bank's net demand and time liabilities. The central bank also raised the minimum amount to be maintained under Cash Reserve Ratio on a daily basis to 99% of the requirement from 70% now. Sentiment for the banking sector is also likely to be negative following weak Apr-Jun earnings by some major banks. Allahabad Bank, Indian Bank, Vijaya Bank, Syndicate Bank, Andhra Bank, ICICI Bank, Karnataka Bank, Bank of Baroda, Canara Bank, Jammu & Kashmir Bank, Union Bank of India, and Bank of Maharashtra are some of the banks that will report Apr-Jun earnings this week.
Coming week, bank stocks will take cues from the Reserve Bank of India's first quarter review of its monetary policy on Tuesday. Given the recent steps taken by the RBI to curb volatility in the exchange rate, most participants believe the central bank will maintain status quo on interest rates. Repo liquidity is limited and tighter CRR (cash reserve ratio) compliance is effectively higher CRR. Hard to expect easier base rates from banks now. Recent RBI measures are likely to continue to put pressure on stocks from the banking sector. On Tuesday, the RBI caped each bank's borrowing limit from the Liquidity Adjustment Facility to 0.5% of each bank's net demand and time liabilities. The central bank also raised the minimum amount to be maintained under Cash Reserve Ratio on a daily basis to 99% of the requirement from 70% now. Sentiment for the banking sector is also likely to be negative following weak Apr-Jun earnings by some major banks. Allahabad Bank, Indian Bank, Vijaya Bank, Syndicate Bank, Andhra Bank, ICICI Bank, Karnataka Bank, Bank of Baroda, Canara Bank, Jammu & Kashmir Bank, Union Bank of India, and Bank of Maharashtra are some of the banks that will report Apr-Jun earnings this week.
