Bank Stocks Outlook for the week – 21 to 25.03.2016
To
trade with upward bias on RBI rate cut hopes
( www.rupeedesk.in )
Banks
stocks are likely to maintain their upward move in the truncated next week as
the underlying
sentiment
remains positive over a possible repo rate cut by the Reserve Bank of India.
Indian financial markets are closed on Thursday for Holi and on Mar 25 for Good
Friday. The central bank is scheduled to detail its monetary policy statement
on Apr 5 but market participants expect an out-ofcycle move to reduce interest
rate.
A
Cogencis Poll of 10 economists showed all expect a 25-basis-point reduction in
the repo rate to
6.50%.
The government has committed to the fiscal consolidation roadmap, CPI (consumer
price
index-based)
inflation was better-than-expected and Fed (US Federal Reserve) interest rate
is not
anytime
soon. All these conditions support the case for a rate cut.
government's
decision to cut interest on small saving schemes, announced post market hours
yesterday,
is also seen supporting bank stocks as lenders have been asking for such
reduction to ensure depositors are not migrating from fixed deposit schemes.
Further news flow pertaining to the
commentary
from investigating authorities on loan defaults involving a large corporate as
well bank
officials
will also provide cues on specific banks. Specific commentaries from banks
pertaining to loan rates post migration to marginal cost-linked loan pricing
from Apr 1 will be also be watched for its impact on net interest margin.