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Summary of Contents
SHAREKHAN SPECIAL
Monthly economy review
The
BSE Bankex has outperformed the BSE Sensitive Index (Sensex) by a
wide margin since the recovery of the broader market after touching
a low of 12,576 on July 16, 2008. For the period July 1–August 19,
the BSE Bankex has appreciated by 22.3% compared with a 12.2%
increase in the Sensex. The recovery in the banking stocks has
primarily been driven by the widespread expectations of reforms in
the banking sector as well as the easing of the inflationary
pressures (global commodity prices have declined in the past few
weeks). However, against the backdrop of tight liquidity conditions,
moderating credit growth and a likely strain on the quality of
banking assets, the fundamental outlook for the banking sector
remains bleak over next few quarters. Hence, the upside to banking
stocks may be largely capped in the short term. However, from the
perspective of a medium to longer term, the banking stocks look
attractive at the current
valuations. | |
