Bank Stocks Outlook
for the week – 18 to 22.07.2016
(Seen firm next week;
pvt banks' results eyed)
Stocks of banks are seen trading with a positive bias next
week, with markets eyeing cues from Apr-
Jun earnings of some of the large private sector banks along
with strong technical cues.
The key stock specific triggers will emerge from the Apr-Jun
performance of large private banks such
as HDFC Bank, Kotak Mahindra Bank, Axis Bank, and Federal
Bank in the coming week. Among
smaller private banks, Lakshmi Vilas Bank will declare their
results while state-owned banks such as
State Bank of Bikaner and Jaipur, and Vijaya Bank will also
declare their numbers.
Based on the continued strong performance on core business
and profits, with growing branch network base, increase in current account and savings account, and
superior asset quality are expected to help IndusInd Bank perform stronger than peers over the next few
years.
The key trigger for state-owned banks will be the
announcement of the first tranche of capital from the government, which they can leverage on to boost their growth
for the rest of this financial year.
Earlier week, quoting a finance ministry source, had
reported that the government is likely to
announce the first tranche of recapitalisation of public
sector banks for 2016-17 (Apr-Mar). The
budgeted allocation for this financial year is 250 bln
rupees, and the first tranche is expected to be less than 200 bln rupees.
As the week progressed, open interest has started shifting
to 19500 strike Calls as well indicating
buying interest. On the Put side, 18500 and 18700 strikes
witnessed decent additions. We feel a close
above the highest Call base will trigger a fresh round of
upsides for the Banknifty index towards
19300-19500.