Bank Stocks Outlook for the week – 20 to 24.02.2017
Bank Stocks Outlook for the week – 20 to 24.02.2017
( www.rupeedesk.in )
Stocks
are seen taking cues from broader markets in the truncated week
starting Feb 20, on absence of sector specific cues. Markets will be
closed on Friday on account of Mahashivratri. Some volatility is also
likely in bank stocks in the coming week, ahead of the expiry of the
February derivative contracts on Thursday. Nifty Bank is expected to
find support at 20200 as maximum concentration of open interest is seen
in strike puts at those levels while the rally on the upside can be seen
moving towards 20800-20900. However, stocks are offering opportunities
on both sides so trade should focus more on stock selection while
keeping a check on leveraged positions. Gains in the private sector
banks are likely to continue next week following a report by brokerage
CLSA Asia Pacific Markets saying that a possible merger between Kotak
Mahindra Bank and Axis Bank will be positive. However, Kotak bank
dismissed the news about merger as speculative. In what could be
negative development for public sector banks, yields on government
securities are likely to harden at current levels as the Reserve Bank of
India has changed its stance from accommodative to neutral. Currently
profitability of public sector banks is heavily dependent on gains from
the rally in government securities. The rise in yields will put pressure
on banks' bottom line along with low credit growth. However, bankers
expect yields to cool down in the next month such that they will not
suffer any mark-to-market losses in March. However, With the added
pressure of rising inflationary pressures, tightening global financial
conditions and absence of aggressive open market operations in 2017-18
(Apr-Mar), yields on the sovereign debt instruments is likely to
increase. We believe G-sec yields to harden in range of 7.5-7.8% in
2017-18. In an interview, Reserve Bank of India Governor Urjit Patel
yesterday said that the Monetary Policy Committee may raise, lower, or
maintain status quo on policy rates depending on the evolving inflation
trajectory. Banks' income from fee is also likely to get impacted in the
near term because of lower merchant discount rates on digital
transactions. Currently, banks are charging lower rates till Mar 31 to
support the push for less-cash economy. However, the Reserve Bank of
India has proposed to restructure merchant discount rates for payments
made through debit cards on the basis of turnover of merchants.
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Bank Stocks Outlook for the week – 20 to 24.02.2017
( www.rupeedesk.in )