Bank Nifty 2nd Nov 2015
Bank Nifty today outperformed the broader Indian Stock Markets. Bank Nifty after making a lower of 17170 started rallying and made a high of 17398 finally Bank Nifty closed the day higher at 17354 up 142 points. Kotak Bank was the top gainer from the Banking space today followed by Icici Bank which was up by 2 percent. Medium to longer term we maintain our view that Banking Sector is set to face problems on multiple fronts and earnings growth will take a significant hit due to competition from payment wallets. Further the slow economic realities will surely hit these banks both private sector banks and public sector banks as we see entire sectors NPA’s and asset quality taking a hit. In some Public Sector Banks the hit is going to be significant. Caution is advised for the entire sector.
For Private Banks like Icici Bank, Axis Bank there will be significant reduction in fee income earned especially from retail customers and we maintain our view to skip this sector and instead switch to Sugar Sector on dips.
Axis Bank Technical Research Report update
Axis Bank has significant resistance at 540 NSE Spot Levels mentioned and overall Axis Bank will remain in a downtrend until and unless 540 is not taken out with volumes. On the lower side we see Axis Bank testing 378 in the next 8-12 months and we do not recommend to Buy into Axis Bank at all, in fact the way the charts are indicating it will be a very good shorting candidate in the next few days.
Icici Bank Q2 Results Update
Icici Bank Q2 b=numbers were in line with most of our estimates. NII was up 12.8 percent year-on-year to Rs 5,252 crore during the quarter with NIM was at 3.52 percent (against 3.54 percent in preceding quarter and 3.42 percent in year-ago period). NII was boosted by loan book, especially retail business. Asset quality weakened in quarter ended September 2015. Gross NPA’s we up by 65 bps year-on-year (up 9 bps sequentially) to 3.77 percent and net NPA rose 56 bps on yearly basis (up 7 bps Q-o-Q) to 1.65 percent during the quarter. In absolute terms, gross NPAs for the quarter were at Rs 15,858 crore, an increase of 37.3 percent compared to year-ago period and 4.8 percent compared to preceding quarter. Net NPAs climbed 71.5 percent year-on-year and 6.7 percent quarter-on-quarter to Rs 6,759.3 crore in same period. We expect further weakness in asset quality going forward.
Bank Nifty Chart is enclosed below for ready reference.
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