Bank Stocks Outlook
for the week – 01 to 05.08.2016
(Positive trend
eyeing broad market, GST bill)
Bank stocks may trade with a positive bias next week
tracking cues from the broad market which is
focussed on possible passage of the much delayed Goods and
Services Tax in Parliament. The trend is positive, and unless there is any adverse
development on the GST front, the broad market and bank stocks will move higher. The passage of GST will be
seen as the government finally getting into consensus mode with opposition for passage of key
legislation.
The government has listed the Constitution amendment bill to
facilitate the rollout of the Goods and
Services Tax for consideration and passage in the Rajya
Sabha in the coming week. Additionally,
quoting a Congress source. Passage of the long delayed GST
bill will push broad equity markets,
including bank stocks, higher.
Indian Bank is the only key lender which will report Apr-Jun
earnings in the coming week on
Tuesday. We feel the outperformance in banking stocks is
likely to continue unless any negative
trigger comes from quarterly numbers, which will help the
price ratio to inch higher.
Waves Strategy Advisors in its technical note point out that
unlike other state-owned bank stocks such as Punjab National Bank and Bank of India which have
consolidated after rising sharply, State Bank of India is moving in a 222-235 rupee band with a potential for
breakout in either direction.
