RUPEE DESK: Bank Stocks Outlook for the week (18-22.06.2012)
Stocks of most banks may move with an upward bias early Monday, anticipating the Reserve Bank of India to ease its monetary policy at the mid-quarter policy review, which will be released at 1100 IST. The central bank's decision on interest rates and the underlying tone of the review may lend direction to bank shares for most part of next week.
A 25-basis-point rate cut has already been factored in the stocks. In the
absence of a rate action, bank stocks may fall sharply lower. Pratip Chaudhuri,
chairman of State Bank of India,
the country's largest lender, hopes for a 100-basis-point cut in the CRR by the
RBI.
More than a repo rate cut, a CRR reduction would augur well for banks as the
move will directly inject funds into the banking system and help banks lower
their cost of funds, the benefit of which can be passed on to borrowers.
Among global events, the outcome of the election in Greece on Sunday is a key
development which will be watched keenly. The election is a critical factor
in resolution of the ongoing debt crisis in the Eurozone as its outcome will
determine whether or not Greece
will remain a part of the 17-nation block.
Some of the long positions were squared off yesterday post the inflation data
but there are quite a few longs left in Bank Nifty (futures). So, we can expect
the index to touch 10,200 points in the event of any positive surprise from Greece
elections or RBI policy.
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