Bank Stocks Outlook for the week – 05 to 09.Oct.2015 (Bias weak, recovery seen in selective banks)

Bank Stocks Outlook for the week – 05 to 09.Oct.2015

(Bias weak, recovery seen in selective banks)
 ( www.rupeedesk.in )

After falling in the past two trading sessions, bank stocks are likely to continue to trade with a weak bias on concerns over net interest margins post the Base Rate cut initiated by most banks.

However, shares of some banks may bounce back on value buying as investors may gauge the fundamentals of these lenders in terms of cost of deposits and view on asset quality.

While there is broad consensus that NIMs will be impacted but mostly everyone (banks) is also going for deposit rate cut. So that will somewhat offset the impact. The move by banks follows the Reserve Bank of India's decision to reduce the repo rate by a higherthan-expected 50 bps to 6.75% on Tuesday.

Post market hours yesterday, ICICI Bank announced a 35 basis point reduction in Base Rate at 9.35%, effective Monday.

In the later half of next week, IndusInd Bank would be in focus ahead of its Jul-Sep earnings. The results, scheduled on Oct 9, will be closely watched for cues on the performance of the sector in terms of credit offtake and asset quality trends.