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Bank stocks are seen up next week, with the new Reserve Bank of India Governor Raghuram Rajan expected to continue with his banking reforms and announce more steps to shore up the rupee. However, the gains could be limited, with investors exercising caution ahead of the US Federal Reserve's Federal Open Market Committee meeting on Sep 17-18. The markets will be eyeing the US Fed's announcements on the future of its monthly asset purchase programme, which will lend cues to rupee's movement, and is also eyed as an important event from the RBI's policy making perspective.
On the home front, Index of Industrial Production for July and Consumer Price Index-based Inflation (combined, rural and urban) for August is likely to give inputs on the monetary policy. With the rupee strengthening gradually on the back of the measures taken by the RBI, the latest being an enhancement in the size of the bilateral swap agreement with the Bank of Japan from $15 bln to $50 bln, analysts expect bank stocks to rally by as much as 8-10%, with private sector banks leading the charge. Public sector banks are expected to catch up too. Banks are also likely to benefit from increase in credit demand as companies are substituting their working capital requirements by taking loans instead of issuing commercial papers.
AAA rated borrowers which were earlier borrowing from the bond market are likely to borrow from banks given the liquidity squeeze. We are already seeing that with fortnightly credit growth numbers. SBI is likely to be a significant beneficiary of this surge in credit. Bank stocks are likely to extend gains next week, with Bank Nifty seen in the 9800-10400 range. While some bouts of profit booking are likely, the overall trend is positive. State-owned banks like Dena Bank, Allahabad Bank and Indian Overseas Bank are seen rising 6-8% next week.
Bank stocks are seen up next week, with the new Reserve Bank of India Governor Raghuram Rajan expected to continue with his banking reforms and announce more steps to shore up the rupee. However, the gains could be limited, with investors exercising caution ahead of the US Federal Reserve's Federal Open Market Committee meeting on Sep 17-18. The markets will be eyeing the US Fed's announcements on the future of its monthly asset purchase programme, which will lend cues to rupee's movement, and is also eyed as an important event from the RBI's policy making perspective.
On the home front, Index of Industrial Production for July and Consumer Price Index-based Inflation (combined, rural and urban) for August is likely to give inputs on the monetary policy. With the rupee strengthening gradually on the back of the measures taken by the RBI, the latest being an enhancement in the size of the bilateral swap agreement with the Bank of Japan from $15 bln to $50 bln, analysts expect bank stocks to rally by as much as 8-10%, with private sector banks leading the charge. Public sector banks are expected to catch up too. Banks are also likely to benefit from increase in credit demand as companies are substituting their working capital requirements by taking loans instead of issuing commercial papers.
AAA rated borrowers which were earlier borrowing from the bond market are likely to borrow from banks given the liquidity squeeze. We are already seeing that with fortnightly credit growth numbers. SBI is likely to be a significant beneficiary of this surge in credit. Bank stocks are likely to extend gains next week, with Bank Nifty seen in the 9800-10400 range. While some bouts of profit booking are likely, the overall trend is positive. State-owned banks like Dena Bank, Allahabad Bank and Indian Overseas Bank are seen rising 6-8% next week.
