SBI NSE Stocks – Lucrative Bets

For some time banks were in the news on threats to their ratings because of bad loans and low quality of assets. SBI, India’s largest bank, is no exception. A gradual recovery is being witnessed at present, and hence, no major threat to their ratings! According to market experts the issue of non-performing loans may continue for few more months affecting the SBI NSE stocks.

SBI NSE is trending at present. According to the last 52 week price statistics, price of the stock was perched lowest at Rs. 1802.30 and highest at Rs. 2551.70.

According to the Chairman of the bank, q4 (January-March) would register better figures compared to q3 because of lower non-performing assets in addition to better recoveries in retail NPAs. A positive gaining is also expected from the bank’s agriculture portfolio.

Going by year-on-year performance, SBI NSE stocks are lucrative bets for the long term. For short term, cautiousness should be the mantra! And that's the same case with BSE Banking Index.

On the BSE Banking Index, ICICI Bank is up 3.4 pct, Yes Bank up 1.3 pct, HDFC Bank rises 0.7 pct, SBI up 0.5 pct

Repo rate hold by the RBI!

RBI’s holding of the repo rate is no big surprise as it was already reported that a rate cut was ‘highly improbable’ though India's main inflation gauge WPI rose 7.24 percent from a year earlier against the expectations of 7.6 percent. Of course, a rate cut of 8 percent is possible in January and leading international economists forecast a series of rate cuts in 2013 and this will definitely show gains in the BSE Banking Index. Thanks to possible easing of inflation in the next few months!

The RBI kept interest rates on hold though the government put pressure on the central bank to reduce borrowing costs. The bank assured of a rate cut in January and shifted focus towards enhancing a flagging Indian economy. BSE Banking Index at NSE went up with both the sensex and nifty trending at a moderate rate.

One of the reasons for the RBI holding the repo rate was the low GDP growth (below 6 percent) posted for the past three quarters.

Moody’s outlook for the Indian banking system and BSE Banking Index!

Banks’ profits are likely under pressure over the next 12 to 18 months. Yes, the Indian banking system, as projected by the rating agency Moody’s, would remain in the negative owing to a challenging operating environment. The negative atmosphere follows from a blend of weak local currency, high inflation, high interest rates, and of course slow economic growth! It is the slowest growth in a decade that is being witnessed for the fiscal year that ends in March 2013. In the September quarter, the Indian economy grew by 5.3 percent.

Moody's representative pointed that the negativity of the situation of the Indian banking system may further lead to a further worsening in asset quality, fall in profitability, and an increase in provisioning costs. Thanks to the decision by the government of injecting additional capital into the state banks within the next few weeks; but the injection would not exceed the Rs.150 billion mark.

Moody's rating did not show any major impact on the BSE Banking index. Infact, SBI shares were up by 2% in the morning session, trading near INR2239/- The capital infusion news by the Finance Minister has given a spur to the Banking Index. The government is likely to take decision on the capitual infusion this week, however it will be restricted to the 150 billion rupees mark as suggested in the fiscal budget 2013.