Bank Stocks Outlook: May rise next week as valuations attractive

[K.Karthik Raja]

Bank Stocks Outlook: May rise next week as valuations attractive

MUMBAI - Banking stocks may rise slightly next week as attractive
valuations are likely to lure investors. However, any big upside may
be capped as overall market sentiment remains cautious.
Valuations are quite cheap. But broad market volatility is
affecting the bank stocks as well. One should ignore the short-term
volatility and stay invested.
Uncertainty in global equities amid worries of further write-downs
by
financial majors kept equity markets choppy since Monday.
Since Monday, Bombay Stock Exchange's Sensex fell 4.3% and
National Stock Exchange's Nifty was down 3.7%.
Some stocks have been very badly beaten down, like ICICI. we feel
they should bounce back next week.
The main reason for fall in ICICI Bank shares is holding company
plan getting postponed.
Earlier this month, the bank scrapped the deals entered with
investors who had intended to pick up stake in the bank's proposed
holding company ICICI Financial Services Ltd.
.
QIP ISSUES
Banks are queuing up to raise funds via qualified institutional
placement and want to avoid tapping the public issue route.
Today, UCO Bank Chairman and Managing Director S.K. Goel told
that the bank may defer its follow-on public issue plan given the
volatile
markets and would wait for the markets to stabilise.
The bank may also tap QIP route to raise a part of its proposed
capital. Bank of India has priced its QIP at 360 rupees a share and
will raise 13.60 bln rupees from the issue.
.
Research Pick
ICICI Bank is expected to see an upside next week, as investors
will now consider the value of the individual subsidiaries locked in.
"Recently Kamath (ICICI Bank Chief Executive Officer and Managing
Director K.V. Kamath) said the bank will raise money independently
from each subsidiary," Broachwala said.
The frontline state-run bank shares may also rally next week.
IDBI Capital's Bhat expects some upside in mid-cap stocks like
Corporation Bank, Oriental Bank of Commerce, Syndicate Bank as they
are trading at low book values.
.
Closing prices of shares of leading banks in rupees, compared with
a week ago, on National Stock Exchange:
.
Feb 8 Feb 1 % change
.
Andhra Bank 89.40 91.95 -2.77
Bank of Baroda 385.40 408.25 -5.60
Bank of India 353.90 395.65 -10.55
Canara Bank 294.60 295.40 -0.27
Corporation Bank 329.95 334.75 -1.43
HDFC Bank 1441.95 1571.00 -8.21
ICICI Bank 1073.90 1198.15 -10.37
Oriental Bank of Commerce 278.40 247.35 12.55
Kotak Mahindra Bank 858.40 972.65 -11.75
Punjab National Bank 634.30 648.90 -2.25
State Bank of India 2192.10 2184.60 0.34
Union Bank of India 191.55 192.90 -0.70
.
Sensex 17464.89 18242.58 -4.26
Nifty 5120.35 5317.25 -3.70
CNX Bank Index 8817 9752.25 -9.59
.