Bank Stocks Outlook: Up next wk; high inflation a concern
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naresh0...@yahoo.co.in
Apr 14, 2008, 3:38:42 AM4/14/08
to Kences1
Bank Stocks Outlook: Up next wk; high inflation a concern
Friday, Apr 11
Bank shares are likely to rise next week because of their
attractive valuation and also due to investors drawing comfort from
the
fact that strong February industrial production data may lead to
better
credit demand.
PSU (public sector undertaking) banks have not been very
aggressive in forex derivatives. Also, the market is gradually
discounting a CRR (cash reserve ratio) hike after the sustained rise
in inflation since the last fewweeks. Industrial production improved
to 8.6% in February from 5.8% a month ago.
Credit growth slowed substantially in 2007-08 to 21.6% from 28.1%
year ago, on Reserve Bank of India's sustained monetary tightening
measures.
.
INFLATION WEIGHS
However, the upside in bank shares is seen limited on worries over
further monetary tightening measures from RBI.
A rise in inflation means that RBI may hike CRR at the annual
policy. A CRR hike is negative for bank stocks .
Inflation for the week to Mar 29 jumped to an over 3-year high of
7.41% from 7.00% a week ago.
Recently, RBI Deputy Governor Rakesh Mohan indicated that any step
that is likely to be taken to control inflation will be in the annual
monetary and credit policy which will be released on Apr 29.
Bankers expect RBI to hike CRR by 50 bps.
There is around 860 bln rupees of government spending lined up
that will add to liquidity.
The liquidity overhang will add to inflationary pressure, which
may prompt RBI to hike CRR, economists said.
Market is gradually discounting a CRR hike as inflation continues
to
remain very high.
.
STOCK-SPECIFIC ACTIVITY
Buying is likely to be restricted to frontline state-run bank
stocks.
Investors want greater clarity on earnings outlook given the
issues of
derivatives exposure losses, slow credit growth, and the pressure on
net interest margin.
State Bank of India, Union Bank of India, and Punjab National Bank
are some of the state-run bank stocks that can witness some buying.
.
Today's closing prices of shares of leading banks, in rupees,
compared
with a week ago, on National Stock Exchange:
.
Apr 11 Apr 4 % change
.
Andhra Bank 77.05 74.30 3.70
Bank of Baroda 294.95 269.05 9.63
Bank of India 305.35 275.25 10.94
Canara Bank 224.90 217.05 3.62
Corporation Bank 307.75 295.10 4.29
HDFC Bank 1,330.05 1,293.85 2.80
ICICI Bank 788.05 764.55 3.07
Oriental Bank of Commerce 178.90 166.60 7.38
Kotak Mahindra Bank 638.55 614.55 3.91
Punjab National Bank 509.10 491.40 3.60
State Bank of India 1,667.10 1,601.70 4.08
Union Bank of India 151.30 137.55 10.00
.
Sensex 15807.64 15343.12 3.03
Nifty 4777.80 4647.00 2.81
CNX Bank Index 6838.45 6545.15 4.48
.
End
Friday, Apr 11
Bank shares are likely to rise next week because of their
attractive valuation and also due to investors drawing comfort from
the
fact that strong February industrial production data may lead to
better
credit demand.
PSU (public sector undertaking) banks have not been very
aggressive in forex derivatives. Also, the market is gradually
discounting a CRR (cash reserve ratio) hike after the sustained rise
in inflation since the last fewweeks. Industrial production improved
to 8.6% in February from 5.8% a month ago.
Credit growth slowed substantially in 2007-08 to 21.6% from 28.1%
year ago, on Reserve Bank of India's sustained monetary tightening
measures.
.
INFLATION WEIGHS
However, the upside in bank shares is seen limited on worries over
further monetary tightening measures from RBI.
A rise in inflation means that RBI may hike CRR at the annual
policy. A CRR hike is negative for bank stocks .
Inflation for the week to Mar 29 jumped to an over 3-year high of
7.41% from 7.00% a week ago.
Recently, RBI Deputy Governor Rakesh Mohan indicated that any step
that is likely to be taken to control inflation will be in the annual
monetary and credit policy which will be released on Apr 29.
Bankers expect RBI to hike CRR by 50 bps.
There is around 860 bln rupees of government spending lined up
that will add to liquidity.
The liquidity overhang will add to inflationary pressure, which
may prompt RBI to hike CRR, economists said.
Market is gradually discounting a CRR hike as inflation continues
to
remain very high.
.
STOCK-SPECIFIC ACTIVITY
Buying is likely to be restricted to frontline state-run bank
stocks.
Investors want greater clarity on earnings outlook given the
issues of
derivatives exposure losses, slow credit growth, and the pressure on
net interest margin.
State Bank of India, Union Bank of India, and Punjab National Bank
are some of the state-run bank stocks that can witness some buying.
.
Today's closing prices of shares of leading banks, in rupees,
compared
with a week ago, on National Stock Exchange:
.
Apr 11 Apr 4 % change
.
Andhra Bank 77.05 74.30 3.70
Bank of Baroda 294.95 269.05 9.63
Bank of India 305.35 275.25 10.94
Canara Bank 224.90 217.05 3.62
Corporation Bank 307.75 295.10 4.29
HDFC Bank 1,330.05 1,293.85 2.80
ICICI Bank 788.05 764.55 3.07
Oriental Bank of Commerce 178.90 166.60 7.38
Kotak Mahindra Bank 638.55 614.55 3.91
Punjab National Bank 509.10 491.40 3.60
State Bank of India 1,667.10 1,601.70 4.08
Union Bank of India 151.30 137.55 10.00
.
Sensex 15807.64 15343.12 3.03
Nifty 4777.80 4647.00 2.81
CNX Bank Index 6838.45 6545.15 4.48
.
End
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