Bank Stocks Outlook for the week – 08 to 12.05.2017
Bank Stocks Outlook for the week – 08 to 12.05.2017
( www.rupeedesk.in )
Investors are likely to be cautious on bank stocks, especially public sector banks, next week, and the sentiment remains negative despite two major announcements regarding resolution of asset quality issues in the banking industry. PSU bank stocks fell yesterday after the government detailed an ordinance on tackling non-performing assets, due to lack of clarity regarding the Reserve Bank of India's role in speeding up the resolution process. After President Pranab Mukherjee's assent on Thursday, the government yesterday notified The Banking Regulation (Amendment) Ordinance, 2017, which allows the Reserve Bank of India to order lenders to initiate insolvency proceedings in case of a default under the provisions of the Insolvency and Bankruptcy Code, 2016. Further, the RBI can also issue orders to banks for the resolution of stressed assets, and it can appoint committees to advise banks in their effort to find a solution to dispose off their stressed assets. The announcement faced a mixed reaction from market participants, with some supporting the need for central bank's intervention, while some arguing that the regulator should not be allowed to meddle in banks' commercial operations. In the second notification later during the day, RBI's directed banks to adhere to timelines given in various schemes for resolving stressed loans, and said that banks not doing so will be penalised. This is seen weighing on bank stocks as most public sector banks continue to struggle with huge piles of bad loans. Additionally, with most public sector banks starting to detail their Jan-Mar earnings, from the next week onwards, reports of worsening asset quality is seen weighing on the sector. Canara Bank, Union Bank of India, Syndicate Bank, Vijaya Bank, Dena Bank and UCO Bank are scheduled to detail their results in the coming week. However, some counter-activity could be seen on positive guidance by these banks, or as and when any further clarification regarding the ordinance is announced.
Source : Cogencis Information Services Ltd.
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Bank Stocks Outlook for the week – 08 to 12.05.2017
( www.rupeedesk.in )
Source : Cogencis Information Services Ltd.
