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Stocks of banks are likely to trade with a negative bias amidst high volatility ahead of the expiry of November futures contract. Yields on government securities will be tracked to gauge its impact on treasury portfolio of each bank. Also, the yield movement will be watched after yesterday's issuance of a new 10-year paper--8.83%, 2023 bond--which has received a favourable response in the secondary market so far. Any respite in the banking index can be expected only if 10-year bond yields start softening and move below 8.9 levels. Moreover, as the rupee is expected to find resistance near 63.5 levels, a round of short covering can be expected during settlement.
Thus, an upmove towards 11000 (on Bank Nifty) cannot be ruled out towards settlement. Within the sector, stocks of private sector banks as compared to their public sector peers. Our pecking order suggests a move towards quality bets - retail funding franchise with sound underwriting practices, viz. ICICI bank, Axis bank and HDFC Bank. We remain watchful of incremental asset quality pressures for the bank, owing to its relatively high exposures, particularly to sectors like power and iron and steel, amidst an overall weak macro environment.
Stocks of banks are likely to trade with a negative bias amidst high volatility ahead of the expiry of November futures contract. Yields on government securities will be tracked to gauge its impact on treasury portfolio of each bank. Also, the yield movement will be watched after yesterday's issuance of a new 10-year paper--8.83%, 2023 bond--which has received a favourable response in the secondary market so far. Any respite in the banking index can be expected only if 10-year bond yields start softening and move below 8.9 levels. Moreover, as the rupee is expected to find resistance near 63.5 levels, a round of short covering can be expected during settlement.
Thus, an upmove towards 11000 (on Bank Nifty) cannot be ruled out towards settlement. Within the sector, stocks of private sector banks as compared to their public sector peers. Our pecking order suggests a move towards quality bets - retail funding franchise with sound underwriting practices, viz. ICICI bank, Axis bank and HDFC Bank. We remain watchful of incremental asset quality pressures for the bank, owing to its relatively high exposures, particularly to sectors like power and iron and steel, amidst an overall weak macro environment.
