Bank Stocks Outlook for the week – 07 to 11.Jul.2014
In line with the broad market, bank stocks are seen trading with positive bias ahead of the
Union Budget next week. Key trigger for the index could be the Union Budget on July 10,
2014. With a new government in place, all measures that augur well for fiscal
prudence are likely to be greeted with a positive move.
Public sector banks would be in focus as most are awaiting reforms or at least a framework
for the proposed holding company which could help them raise funds and meet the Basel III
norms. The government's commentary on the recapitalisation of state-owned banks would
be a key factor for bank stocks.
Last month, Financial Services Secretary G.S. Sandhu said that while the government is not
looking to raise the interim budget allocation of 112 bln rupees for recapitalisation of public
sector banks in the full Budget, it would infuse funds in case of urgent requirement.
Measures to revive economy, which will spur banking sector's credit growth and help reduce
the stressed assets, would also be keenly awaited. With expected lines of improvement in
economy, we expect gradual pick up in capex (capital expenditure) cycle especially for
power, infrastructure and capital good segment for large PSU as well as private sector
companies which in turn would result in credit growth momentum for the banks.
Among stocks, IndusInd Bank would be in focus as the private sector lender will detail its
Apr-Jun results on Wednesday.
In line with the broad market, bank stocks are seen trading with positive bias ahead of the
Union Budget next week. Key trigger for the index could be the Union Budget on July 10,
2014. With a new government in place, all measures that augur well for fiscal
prudence are likely to be greeted with a positive move.
Public sector banks would be in focus as most are awaiting reforms or at least a framework
for the proposed holding company which could help them raise funds and meet the Basel III
norms. The government's commentary on the recapitalisation of state-owned banks would
be a key factor for bank stocks.
Last month, Financial Services Secretary G.S. Sandhu said that while the government is not
looking to raise the interim budget allocation of 112 bln rupees for recapitalisation of public
sector banks in the full Budget, it would infuse funds in case of urgent requirement.
Measures to revive economy, which will spur banking sector's credit growth and help reduce
the stressed assets, would also be keenly awaited. With expected lines of improvement in
economy, we expect gradual pick up in capex (capital expenditure) cycle especially for
power, infrastructure and capital good segment for large PSU as well as private sector
companies which in turn would result in credit growth momentum for the banks.
Among stocks, IndusInd Bank would be in focus as the private sector lender will detail its
Apr-Jun results on Wednesday.
