Bank news (sep-18-2012)
Linkedin

Bank news (sep-18-2012)

Chennai : India | Sep 18, 2012 at 1:12 AM PDT
XX XX
Views: Pending
 

PSU banking space shines; Allahabad Bank, OBC up over 10% in 2 days

DATE: 18/09/2012
NEW DELHI: The BSE PSU index surged over 1 per cent in trade on Tuesday, led by gains in Allahabad Bank, Orietal Bank of Commerce and Andhra BankBSE 5.28 % which have rallied over 10 per cent in two trading sessions.

The PSU banking shares extended their rally for the second day in a row after the Reserve Bank of IndiaBSE 4.54 % (RBI) slashed cash reserve ratio (CRR) by 25 bps to reduce borrowing costs.

"Shares in state-owned banks gain on hopes that the government would soon take a decision on restructuring debts of State Electricity Boards (SEBs)," Reuters reported. According to media reports indicated that a cabinet committee is likely to take a call on financial restructuring of SEBs on Thursday.

The report added states will take a burden of 50 percent of the debt and issue bonds against it, while the other 50 percent of debt will have to be restructured by the banks.

"We are positive on the banking space in view of a likely economic revival," said Ramanathan K, executive VP & head, ING Investment Management, in an ET report.

"Midcap and PSU banking scrips trading at 0.5-1 times their book value would benefit, and the spread between them and their private sector peers, trading at 3 times book value, would narrow."

Most analysts are of the view that economic revival bodes well for banks, especially government ones.

At 11:00 am, Allahabad BankBSE 5.26 % was trading 3.8 per cent higher to Rs 138.25. Tracking the strong momentum in the stock, Ashwani Gujral has placed an intraday buy target for the public sector bank at Rs 152 with a stop loss of Rs 134.

Andhra Bank was trading 4.1 per cent higher at Rs 102.60, Bank of India surged 3.6 per cent to Rs 291.25, Canara BankBSE 6.27 % advanced 4.6 per cent to Rs 70.25 and Oriental Bank of Commerce was trading 7.4 per cent higher at Rs 273.20.

Analysts expect the rally to continue for some more time before reaching a plateau.

"Change in stance on PSU banks is not due to any structural change, but in fact caused by the government's and the RBI's actions on fiscal and monetary policies," Dolat Capital said in a report.

"Sustained rally in PSU banks would come from improvement in banks' credit demand and asset quality (as result of the fiscal and monetary policy actions)," added the report.

Despite the overall optimism, asset quality continues to remain a matter of concern. ET quoting a Deutsche Bank report says that the gross NPAs would remain at elevated levels even though slippages may moderate in absolute terms.

Among PSU banks, it estimates SBI's bad debt to rise to 5.5% of total loans this year from 4.5% in FY12, while ICICI Bank's NPAs are expected to rise to 4.1% from 3.7%. However, market opinion has changed since the last week with the government taking a slew of pro-reform measures like allowing FDI in multi-brand retail.

"If the RBI does not change its hawkish stance, we believe that expectations of monetary loosening increase the risk-reward for PSU banks, where our preference remains SBI (high beta, low exposure to power sector)," Deutsche Bank said in a report.
+POWERED BY: CAPITAL MARKET NEWS
www.banknifty.com
http://banknifty2012.blogspot.in/

banknifty2012 is based in Chennai, Tamil Nadu, India, and is a Stringer for Allvoices.
Report Credibility
 
  • Clear
  • Share:
  • Share
  • Clear
  • Clear
  • Clear
  • Clear
 
 
 
Advertisement
 

News Stories

 
  • Banking stocks may gain more on hopes of economic revival

      The Economic Times
    Banking stocks , which rallied 5%-7% on Monday after the RBI cut cash reserve ratio ( CRR ) by a token 25 bps, could gain more on hopes that an economic revival, fuelled by the diesel price hike and easing of norms for foreign investment into retail...
  • FDI marks countdown for UPA: BJP

      NewKerala
    A day after the government notified the decision to allow foreign equity in multi-brand retail, the BJP Friday said it marked the beginning of the countdown for the UPA regime. "The countdown of the government has started after it notified the FDI in...
  • Reform measures to push Sensex to 20k level: DB

      The Economic Times
    The bold reform measures by the Prime Minister to revive economic growth are likely to push the Sensex to the 20,000 level, says a Deutsche Bank report...It is of the view that reforms coupled with positive announcements from Europe and US central...
  • 7% DA hike for govt employees, pensioners

      Indian Express
    DA hike for govt employees, pensioners '+google_ads[i].line2 +'  '+google_ads[i].line3 + ' Agencies : New Delhi, Thu Sep 20 2012, 14:27 hrs Reeling under the impact of diesel price hike and high inflation, the 80 lakh central government employees and...
  • India cuts reserve ratio to boost growth

      Sydney Morning Herald
    Rupee Climb The rupee strengthened 0.6 per cent to 54.0075 per dollar in Mumbai, while the BSE India Sensitive Index rose 0.42 per cent. The yield on the 10-year bonds due June 2022 was little changed. The currency surged 2 per cent on Sept. 14 on...
  • Normalising yield curve will help markets

      Daily News & Analysis
    Yield curves across the market segments have been flat to inverted over the last one-and-a-half years on the back of tight liquidity conditions and policy rate hikes. The normal shape of the yield curve is upward sloping where long maturity bond...

More From Allvoices

Report Your News Got a similar story?
Add it to the network!

Or add related content to this report



Use of this site is governed by our Terms of Use Agreement and Privacy Policy.

© Allvoices, Inc. 2008-2014. All rights reserved. Powered by PulsePoint.