GOLDEN RULES FOR TRADING

Bank Stocks Outlook for the week – 23 to 27.05.2016 (Mixed next week; PSU banks seen under pressure)

Bank Stocks Outlook for the week – 23 to 27.05.2016
(Mixed next week; PSU banks seen under pressure)

Bank stocks are seen trading with a mixed bias in the coming week with continued negative trend for public sector banks given the asset quality worries. Counter specific action is seen as banks such as State Bank of India, Canara Bank, Bank of India, and Karur Vysya Bank among others will detail their results in the last leg of Jan-Mar earnings season. On Monday, IDBI Bank is seen opening lower after it reported a net loss of 17.36 bln rupees owing to sharp rise in provisioning, post market hours yesterday. Including IDBI Bank, 11 state-owned banks have reported a cumulative loss of around 170 bln rupees as lenders continued with Reserve Bank of India's Asset Quality Review.

Trend remains negative for PSB (state-owned banks) because of lack of buying. Once SBI's numbers are out, there may be a fresh look at these stocks. Selective demand in private banking space with preference for likes of YES Bank and IndusInd Bank. During the week, development on the SBI's plans to merger all its five associate banks will be eyed. Post market hours on Tuesday, SBI said it was seeking an in-principle sanction from the government to enter into negotiations with its five associate banks and Bharatiya Mahila Bank to acquire their assets and liabilities. Of SBI's associate banks, State Bank of Bikaner and Jaipur, State Bank of Mysore, and State Bank of Travancore are listed, while State Bank of Hyderabad and State Bank of Patiala aren't.