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Stocks of most banks are seen slightly weak over the next few trading sessions with the market eyeing the Reserve Bank of India's second quarter monetary policy review on Tuesday for cues.Banks' earnings will also determine the movement in stocks. However, the market is expecting at least a cut in Cash Reserve Ratio or Statutory Liquidity Ratio Tuesday, which will boost liquidity and help credit flow to productive sectors. Banks have been seeking a further cut in Cash Reserve Ratio as it increases profitability, reduces cost of funds and enhances margins.
Bank Nifty is seen trending downwards on profit booking if the RBI does not take any measure at all on Tuesday. The focus will also be on stocks of banks like Bank of India, IDBI Bank, Karur Vysya Bank, State Bank of Mysore, State Bank Of Travancore, and State Bank of Bikaner and Jaipur that detail their Jul-Sep results in the coming week. Punjab National Bank, Indian Overseas Bank, and Bank of Baroda have all shown stress on asset quality with guidance for further problems in the future. Among state-owned banks, IDBI Capital Market Services has downgraded Bank of Baroda's stock to hold from buy citing disappointment in Jul-Sep asset quality numbers and the recent uptick in the bank's stock price.
