Bank Sector Report for the week (09 - 13.07.2012)

[rupeedesk]

Bank Sector Report for the week (09 - 13.07.2012)

Stocks of most banks are seen lower in the coming week as investors book profits to take advantage of the rise in stock prices over the last few sessions. Most bank stocks have risen over the last few sessions, but we feel the upside is limited and expect Bank Nifty to ease towards 10,300 levels in the coming week. The rise has been sentiment driven but unless some actual RBI policy action or government policy changes materialise, the rise is unsustainable. However, We expects medium sized state-owned banks like Allahabad Bank, Dena Bank, UCO Bank, Vijaya Bank, Union Bank of India, Indian Overseas Bank, Canara Bank and Bank of India to be positive.

Markets, especially Bank Nifty still has some short positions standing in it and these shorts would lend support in every dip. As downside looks limited in large caps and positive bias and consolidation are two likely probabilities, midcap may catch up with large caps and outperform in near term. Early trends in Apr-Jun earnings will also emerge next week, with IndusInd Bank and HDFC Bank slated to declare their results on Tuesday and Friday, respectively. Apr-Jun is generally a subdued period for bank profits, especially on-quarter, as it coincides with slack loan demand season for the industry. Overall, we do not expect any major surprises in Q1FY13 (lacklustre due to seasonality). While our top large-cap picks are SBI and Axis Bank, we prefer YES Bank among mid-caps from a long-term perspective. Punjab National Bank and Oriental Bank of Commerce on strong asset quality while it sees Union Bank of India report lacklustre numbers.

By RUPEE DESK

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