Monday, June 18, 2012

Mehta Equities on top 3 banking stocks Source: IRIS (18-JUN-12)

An unexpected move from RBI leads the fall in banking space. In a bid to tame the inflation demon, Reserve Bank disappointed the investors expectation by keeping the policy repo rate unchanged at 8% in its mid-quarter monetary policy. The repo is the rate at which, banks borrow from the regulator. The cash reserve ratio (CRR) or the share of deposits lenders need to keep with the regulator too remains unchanged at 4.75%. A cut in these rates would have reduced the cost of accessing funds for lending institutions. It would have also eased money supply in the financial system by making it more attractive for commercial banks not to park their funds with the RBI in the form of government securities, and instead lend it for commercial purposes. By not cutting rates, RBI has shown resistance to the pressure that was being built on it to cut rates. The pressure was emanating out of recent data which showed that the economy is facing low growth. The banking share index Bankex, the largest loser among sectoral indices is down 2% or 342 points at 11,245 points, declining 494 points from day`s high of 11,739 at 1105 hours, compared to less than 1% fall in the benchmark index Sensex. Prashanth Tapse, AVP Research, Mehta Equities gave trade recommendation for three banking stocks: SBI: SBI, being the leading commercial bank reacted more on the RBI move falling almost 5% to Rs 2,110, falling 5.5% from intra-day`s high of Rs 2,232. Technically the stock have strong support near 2,085, if broken we can see 1980 levels because we believe on the overall basis market are tend to be on negative trend. Sell SBI. Shares of the bank declined Rs 71.3, or 3.27%, to trade at Rs 2,111.50. The total volume of shares traded was 827,912 at the BSE (1.27 p.m). ICICI Bank: ICICI Bank is showing negative divergence on charts and is trying to breach 800 levels. Hence advice investors to hold a negative view and Sell with a stoploss near 830. Shares of the bank declined Rs 22.05, or 2.61%, to trade at Rs 822.85. The total volume of shares traded was 432,445 at the BSE (1.29 p.m) HDFC Bank: Technically the stock is trading near to its support level of 525-530, which if holds good one can expect small recovery in the counter. Hence we advice investor to trade with a stop loss of 513 and target of Rs 553. Shares of the company declined Rs 14.5, or 2.65%, to trade at Rs 533.35. The total volume of shares traded was 61,514 at the BSE (1.30 p.m). Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.


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