Bank stocks are likely to trade with a negative bias next week tracking volatile movement
in the broader market on account of expiry of the February futures and options
contract. This month, the derivatives contract will expire on Wednesday, because on
Thursday market will remain shut for Mahashivratri. The F&O (futures and options)
expiry next week can provide some more volatility to the markets. Going ahead, we
believe that markets will remain in a band with no immediate triggers. We, citing the case
of United Bank of India, said communication from the Reserve Bank of India as well as
the finance ministry relating to bad loans and monitoring of non-performing assets would
be keenly tracked for movement in banks' stocks.
State-owned United Bank of India has been in the news after it reported a sharp jump in
losses and non-performing assets in Oct-Dec quarter. Financial Services Secretary Rajiv
Takru yesterday said United Bank of India's Chairperson and Managing Director Archana
Bhargava has resigned, and taken voluntary retirement. We are avoiding PSU banks still
given the concerns on the NPAs, and new found consensus that rate reductions by the
RBI will be farther away than expectations. We expect the first of the rate cuts to emerge
in H2Y15 (Oct-Mar) and the critical assumption here is that we have a normal monsoon.
At best, tactical trades may emerge here and there at times, and could be worth a look at
but nothing beyond that.
in the broader market on account of expiry of the February futures and options
contract. This month, the derivatives contract will expire on Wednesday, because on
Thursday market will remain shut for Mahashivratri. The F&O (futures and options)
expiry next week can provide some more volatility to the markets. Going ahead, we
believe that markets will remain in a band with no immediate triggers. We, citing the case
of United Bank of India, said communication from the Reserve Bank of India as well as
the finance ministry relating to bad loans and monitoring of non-performing assets would
be keenly tracked for movement in banks' stocks.
State-owned United Bank of India has been in the news after it reported a sharp jump in
losses and non-performing assets in Oct-Dec quarter. Financial Services Secretary Rajiv
Takru yesterday said United Bank of India's Chairperson and Managing Director Archana
Bhargava has resigned, and taken voluntary retirement. We are avoiding PSU banks still
given the concerns on the NPAs, and new found consensus that rate reductions by the
RBI will be farther away than expectations. We expect the first of the rate cuts to emerge
in H2Y15 (Oct-Mar) and the critical assumption here is that we have a normal monsoon.
At best, tactical trades may emerge here and there at times, and could be worth a look at
but nothing beyond that.
