Bank
Stocks Outlook for the week (09 - 13.07.2012)
Stocks of most banks are seen
lower in the coming week as investors book profits to take advantage of the
rise in stock prices over the last few sessions. Most bank stocks have
risen over the last few sessions, but we feel the upside is limited and expect
Bank Nifty to ease towards 10,300 levels in the coming week. The rise has been
sentiment driven but unless some actual RBI policy action or government policy
changes materialise, the rise is unsustainable. However, We expects medium
sized state-owned banks like Allahabad Bank, Dena Bank, UCO Bank, Vijaya Bank,
Union Bank of India, Indian Overseas Bank, Canara Bank and Bank of India to be
positive.
Markets, especially Bank Nifty
still has some short positions standing in it and these shorts would lend
support in every dip. As downside looks limited in large caps and positive bias
and consolidation are two likely probabilities, midcap may catch up with large
caps and outperform in near term. Early trends in Apr-Jun earnings will also emerge
next week, with IndusInd Bank and HDFC Bank slated to declare their results on
Tuesday and Friday, respectively. Apr-Jun is generally a subdued period
for bank profits, especially on-quarter, as it coincides with slack loan demand
season for the industry. Overall, we do not expect any major surprises in
Q1FY13 (lacklustre due to seasonality). While our top large-cap picks are SBI
and Axis Bank, we prefer YES Bank among mid-caps from a long-term
perspective. Punjab National Bank and Oriental Bank of Commerce on strong
asset quality while it sees Union Bank of India report lacklustre numbers.
ann� 5 e � @ two weeks. The company has been aggressively buying
its stock at levels around 700 under the ongoing buyback at up to 870 rupees
per share and that has supported the counter. However, little upside from
current levels in the near term. We believe RIL's core business will show
earnings growth starting in 3Q FY13 (Oct-Dec), after three quarters of poor to
flat results, but any turnaround will likely be modest, predicated on our
projection of only moderate improvement in RIL's refining margin and a
bottoming out of petrochemical margins.er} � e � @ headroom for upside potential following the recent rally in the stock.
