Bank Stocks Outlook For The Week - 30.10.2017 To 03.11.2017
Bank Stocks Outlook For The Week - 30.10.2017 To 03.11.2017
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Bank stocks are likely to remain in favor in the coming week, although the upside may be limited by bouts of profit taking along with upcoming trends in Jul-Sep earnings of state-owned banks. The Central Bank of India, Syndicate Bank, IDBI Bank, Andhra Bank and Union Bank of India are scheduled to release earnings for Jul-Sep in the coming week. The recent run up in PSU (bank) stocks has been due to heavy short covering. Some semblance of balance should return although the 2.11 trln rupee recapitalisation will continue to bolster state owned bank stocks. The stocks of state-owned banks rose sharply in the week as the government announced a 2.11trln rupee recapitalisation into state-owned banks over two years through a mix of equity and recapitalisation bonds. However, as the week progressed some of the state-owned banks have seen some profit taking and we see this trend to continue when public sector bank stocks move up again next week. On the technical side, we see support for the Bank Nifty/Nifty ratio close to current levels. The current price ratio (Nifty Bank/Nifty) is placed near 2.41 levels. We feel support is very near. The ratio is likely to move towards 2.45 and 2.48 levels in coming days, which is likely to provide a cushion to the index. The below expected Jul-Sep results for ICICI Bank will also be in focus early next week, as the numbers were announced after market hours. We drew comfort from the bank taking the full provision impact of stressed loans, as per discussions with RBI in the quarter ended Sep 30. But, private sector banks declaring sudden divergence in bad loans, after the RBI audit, as seen in the case of Axis Bank, YES Bank, ICICI Bank and even for one case with HDFC Bank, is a dampener on the long-term prospects and may slightly erode the premium that private sector banks have had over their public sector peers.
We continue to believe that last few years initiatives on retail and a digital focus raise the visibility of sustainable and, importantly, granular EPS (earnings per share) growth and rising margins. Amongst top pick. We had continued concerns over the IDFC Group-Shriram Group merger. We expect slower growth and NIMs (net interest margins) pressure (given repricing of wholesale book and priority sector lending drag) to lead to slower revenue traction. Thus, we estimate IDFC to deliver moderate profitability.
Source : Cogencis Information Services Ltd.
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( www.rupeedesk.in )
Bank stocks are likely to remain in favor in the coming week, although the upside may be limited by bouts of profit taking along with upcoming trends in Jul-Sep earnings of state-owned banks. The Central Bank of India, Syndicate Bank, IDBI Bank, Andhra Bank and Union Bank of India are scheduled to release earnings for Jul-Sep in the coming week. The recent run up in PSU (bank) stocks has been due to heavy short covering. Some semblance of balance should return although the 2.11 trln rupee recapitalisation will continue to bolster state owned bank stocks. The stocks of state-owned banks rose sharply in the week as the government announced a 2.11trln rupee recapitalisation into state-owned banks over two years through a mix of equity and recapitalisation bonds. However, as the week progressed some of the state-owned banks have seen some profit taking and we see this trend to continue when public sector bank stocks move up again next week. On the technical side, we see support for the Bank Nifty/Nifty ratio close to current levels. The current price ratio (Nifty Bank/Nifty) is placed near 2.41 levels. We feel support is very near. The ratio is likely to move towards 2.45 and 2.48 levels in coming days, which is likely to provide a cushion to the index. The below expected Jul-Sep results for ICICI Bank will also be in focus early next week, as the numbers were announced after market hours. We drew comfort from the bank taking the full provision impact of stressed loans, as per discussions with RBI in the quarter ended Sep 30. But, private sector banks declaring sudden divergence in bad loans, after the RBI audit, as seen in the case of Axis Bank, YES Bank, ICICI Bank and even for one case with HDFC Bank, is a dampener on the long-term prospects and may slightly erode the premium that private sector banks have had over their public sector peers.
We continue to believe that last few years initiatives on retail and a digital focus raise the visibility of sustainable and, importantly, granular EPS (earnings per share) growth and rising margins. Amongst top pick. We had continued concerns over the IDFC Group-Shriram Group merger. We expect slower growth and NIMs (net interest margins) pressure (given repricing of wholesale book and priority sector lending drag) to lead to slower revenue traction. Thus, we estimate IDFC to deliver moderate profitability.
BANK (PSUs) - Up
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Source : Cogencis Information Services Ltd.
