Bad bank plan a welcome step, expect a gap-up opening for Bank Nifty today: Experts

#Bank Of Baroda, #IndusInd Bank, #Market Edge, #Punjab National Bank, #State Bank of India, #Stocks Views, #Yes Bank

The Union Cabinet’s decision to approve a government guarantee of up to Rs 30,600 crore for security receipts to be issued by National Asset Reconstruction Company Ltd (NARCL) is a welcome step as this would reduce the burden of unwanted assets on banks and improve their balance sheets, say market experts.

That apart, the move is also expected to improve credit offtake, which may lead to a gap-up opening for Bank Nifty on Friday, they feel.

Let’s take a look at how market experts interpret the development –

“This is a welcome decision for banks as this would help in losing off its baggage unwanted assets and can function more efficiently,” said Gaurav Garg, Head of Research at CapitalVia Global Research.

Garg further said the banking stocks are expected to do well on September 17 (Friday) and one can expect a gap-up opening for Bank Nifty.

Rahul Sharma, Co-Founder at Equity99, echoes similar views and expects the banking sector to make a good move on Friday. The expert feels it’s a great move by the government, especially for debt-ridden PSU banks, which have been lagging valuations due to loads of NPA.

Aprajita Saxena, Research Analyst at Trustline Securities feels a bad bank formation is a good banking strategy. “It is anticipated that bad bank is likely to take over Rs 80,000 plus crore in the first phase.”

“These security receipts would be tradable in the secondary markets and would infuse much-needed liquidity in the banking system. This bad bank will take over the existing toxic debts of banks and dispose them off to realize value locked in these assets. So, it will definitely improve the balance sheet of lead lenders as well as providing some incremental cashflows to them as well,” Aprajita said.

Pushkaraj Kanitkar, VP Equities at GEPL Capital also said this would help improve balance sheets of several PSUs with legacy NPAs still weighing on the asset quality.

The benchmark indices extended an uptrend for the third consecutive session on September 16 and the last two sessions clearly boosted confidence among market participants. The BSE Sensex and Nifty50 hit fresh record highs, climbing new milestones of 59,000 and 17,600 levels, gaining more than 1.5 percent while the Bank Nifty rallied 3.3 percent in three sessions. Today, the PSU Bank gained the most among sectors, rising 5.4 percent.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said since the banks would remove these NPAs from their balance sheets, they can focus on lending activities that can help trigger a fresh round of credit off-take that the economy badly needs.

Who are beneficiaries of this move and what should investors do?

Investors can hold on to the positions in banking stocks as the short to medium term for the sector looks quite bright now, Gaurag Garg advised.

Rahul Sharma of Equity99 also recommends holding banking stocks especially PSU banks. “Our top picks are Canara Bank, PNB & SBI.”

However, Saxena doesn’t recommend immediately buying banking stocks but to wait and time any fresh entry although quality large-cap banks stocks can be bought right now. “Banking Stocks, for instance, SBI, PNB, Union Bank of India, YES Bank, IndusInd Bank are the few beneficiaries and will be on the radar.”

Santosh Meena, Head of Research, Swastika Investmart feels this is a very positive trigger for PSU banks and the overall economy for liquidity in the system; however, the market has factored in this news in the last two trading sessions.

“We may see some more upside in PSU banks tomorrow (September 17) but profit booking can’t be ruled out at higher levels however this event could be a long-term positive trigger for PSU banks and the infrastructure sector,” Santosh Meena said, adding SBI will remain their top pick in the banking sector and it may outperform most of the private banks in coming years.

Disclaimer: The views and investment tips expressed by the investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Internet Explorer Channel Network
News Related

OTHER NEWS

Sensex jumps 50% from last Dussehra to scale 61,000 mark. 169 stocks give multibagger returns

India’s equity markets have generated huge wealth for investors since Dussehra last year as the benchmark indices scaled new highs, even though there was a pause in April-May due to ... Read more »

S&P 500 surges, biggest daily percentage rise since March on earnings, data

The S&P 500 jumped on Thursday, its biggest daily percentage advance since early March, as companies including Morgan Stanley and UnitedHealth climbed following strong results, while data on the labor ... Read more »

DAILY VOICE | Higher energy prices, coal crisis, supply chain bottlenecks could hamper economic growth in near term: Poonam Tandon of IndiaFirst Life

Poonam Tandon, Chief Investment Officer at IndiaFirst Life Insurance Company, who has over 26 years of experience in the financial services sector, expects festive push, pent-up demand, good monsoon, improving ... Read more »

Share market holiday: BSE, NSE shut today on account of Dussehra

Markets – Image: Reuters The National Stock Exchange of India (NSE) and the BSE will remain closed on October 15 on account of Dussehra. Wholesale commodity markets, including metal and ... Read more »

UCO Bank CEO Atul Kumar Goel appointed chairman of IBA

UCO Bank CEO Atul Kumar Goel has been appointed as chairman of the Indian Banks’ Association (IBA) for 2021-22 succeeding Union Bank of India CEO Rajkiran Rai. Last month Goel ... Read more »

UCO Bank CEO Atul Kumar Goel appointed chairman of Indian Banks' Association

UCO Bank CEO Atul Kumar Goel has been appointed as chairman of the Indian Banks’ Association (IBA) for 2021-22 succeeding Union Bank of India CEO Rajkiran Rai. Last month Goel ... Read more »

SEBI issues revised reporting formats for issuers of non-convertible securities

Markets regulator SEBI on Thursday came out with revised formats for limited review and audit reports to be submitted by entities that have listed their non-convertible securities. The revised formats are ... Read more »

Technical View | Nifty forms bullish candle on weekly & daily charts, experts see it marching towards 18,500

The bulls are in no mood to relent, with the Nifty closing above the 18,300-mark for the first time on October 14, continuing its northward journey for the sixth consecutive ... Read more »

Sensex surpasses 61,000 for first time; investors richer by Rs 68 lakh crore in FY22

The benchmark BSE Sensex surpassed the 61,000 mark for the first time on October 14, taking 14 sessions to add more than 1,000 points from 60,000 on September 24. The ... Read more »

Natural gas futures rise nearly 3.5% on supply crunch; weekly inventory report in focus

Natural gas futures climbed for the second straight day on October 14 as participants increased their long positions as seen by the open interest. The gas price had risen 1.5 percent ... Read more »

Nifty scales 18,300, Sensex summits 61,000: Five factors behind the rally

Bulls kept on charging for the sixth consecutive session on October 14, despite some ups and downs in foreign funds flow, setting the stage perfect for celebrating the Dussehra. The ... Read more »

Australian sharemarket gains ground after three straight days of losses

The Australian sharemarket bounced back after three days of weakness, enough to claw back those losses for much of the session, but ran out of steam. The benchmark S&P/ASX200 index ... Read more »

These 5 private banks offer up to 6.75% interest on tax-saving fixed deposits

Tax optimization should always be a part of your financial plan and not a task to be completed towards the end of the year. Invest wisely, considering your financial goals. Those ... Read more »

Asian stocks up as US dollar squeezed

Asian stock markets have risen, the US dollar has eased and longer-dated bonds rallied as investors reckoned on inflation bringing forward rate hikes around the world. MSCI's broadest index of ... Read more »

Trade Spotlight | What to do with Tata Motors, BHEL, M&M, Tata Chemicals stocks?

The Indian market consistently remained in an uncharted territory as the benchmark indices ended at fresh record closing highs on October 13, outperforming its global peers. The BSE Sensex rallied ... Read more »

Stocks in the news: HCL Tech, PNB, Wipro, Dish TV and MindTree

Nifty futures on the Singapore Exchange traded 78.5 points, or 0.43 per cent higher at 18,258.50, signaling that Dalal Street was headed for a positive start on Thursday. Here are ... Read more »

Buzzing Stocks: Infosys, Wipro, UltraTech Cement and other stocks in news today

Results on October 14: HCL Technologies, Indiabulls Real Estate, Benares Hotels, Century Textiles, Cyient, Den Networks, Ganesh Housing Corporation, GTPL Hathway, Inox Wind, Inox Wind Energy, Mahindra CIE Automotive, Radhe ... Read more »

Hot Stocks | 'Can buy Maruti Suzuki, Indian Bank and Dhampur Sugar for short term'

In the previous week we saw Nifty50 witnessing a breakdown from its rising channel pattern and taking strong support near its 21-day exponential moving average. This week we witnessed a ... Read more »

Five banks may bid for Citi's India consumer businesses

Five top lenders, including HDFC Bank and Kotak Mahindra Bank, are expected to submit binding bids for the Citi India consumer businesses before the October 26 deadline, two officials aware ... Read more »

Carlyle Group to acquire A Twosome Place coffee chain

A Twosome Place image seen on the coffee chain’s official website / Courtesy of A Twosome Place By Anna J. Park The Carlyle Group plans to acquire Korea’s No. 2 ... Read more »

S&P 500 rises but JPMorgan a drag

The S&P 500 has ended higher, led by gains in shares of big growth names like Amazon and Microsoft, but JPMorgan shares fell and weighed on the index even though ... Read more »

Festive offer: PNB reduces gold loan rates by 1.45 percentage points

State-owned Punjab National Bank (PNB) on Wednesday slashed the interest rate on loans against gold jewellery and Sovereign Gold Bond by 145 basis points or 1.45 percentage points as part ... Read more »

Natural gas futures fall on tepid global cues

Natural gas futures on October 13 slumped as participants increased their short positions as seen by the open interest. The gas price had risen 2.99 percent yesterday on the NYMEX. ... Read more »

10 stocks that saw maximum buying and selling by mutual funds

Inflows into equity and equity-oriented mutual fund (MF) schemes continued to be low for the second consecutive month, but inflows into systematic investment plans (SIPs) remained strong and touched over ... Read more »

Bank of Baroda Q2 Net Profit may dip 14.7% YoY to Rs. 978.6 cr: Motilal Oswal

Motilal Oswal has come out with its second quarter (July-September’ 21) earnings estimates for the Banking sector. The brokerage house expects Bank of Baroda to report net profit at Rs. ... Read more »

Punjab National Bank Q2 Net Profit seen up 62.8% YoY to Rs. 1,010.5 cr: Motilal Oswal

This public sector major offers an interest rate of 6.55 percent for loans of over Rs 75 lakh with a 20-year tenure. The EMI works out to Rs 56,139. Motilal ... Read more »

IndusInd Bank Q2 Net Profit seen up 61.9% YoY to Rs. 1,073.5 cr: Motilal Oswal

Representative image Motilal Oswal has come out with its second quarter (July-September’ 21) earnings estimates for the Banking sector. The brokerage house expects IndusInd Bank to report net profit at ... Read more »

Australian sharemarket lower for third straight day, iron ore miners weigh but gold stocks shine

The Australian sharemarket closed marginally lower after a choppy trading session, with banks and miners among the losers, but infant formula manufacturers rocketed. The benchmark S&P/ASX200 index finished down just ... Read more »

IndusInd Bank, Karur Vysya Bank share prices gain after RBI nod to collect taxes

IndusInd Bank and Karur Vysya Bank share prices were up a percent each intraday on October 13 after the Reserve Bank of India  (RBI) allowed the two lenders to collect ... Read more »

Trade Spotlight | What should investors do with Jubilant FoodWorks, ICICI Securities and Radico Khaitan?

The market managed to add third of a percent gains amid volatile session and ended at fresh record closing high on October 12 continuing the uptrend for the third straight ... Read more »

Stocks in the news: Infosys, ZEEL, Tata Motors, Adani Ports and Bajaj Finserv

Nifty futures on the Singapore Exchange traded 42.5 points, or 0.24 per cent higher at 18,047, signaling that Dalal Street was headed for a positive start on Wednesday. Here are ... Read more »

Daily Voice | Robust recovery, macro numbers to push for fiscal consolidation, says Janakiraman of Franklin Templeton

A sharp swing in corporate earnings for 2020-21 and a strong demand recovery in real estate indicate that the growth momentum that India has revived after the Covid crisis will sustain over ... Read more »

Buzzing Stocks: RIL, Infosys, Wipro, Tata Motors and other stocks in news today

Results on October 13: Infosys, Wipro, Mindtree, Advik Laboratories, Aditya Birla Money, Morarka Finance, National Standard, Perfect-Octave Media Projects, Plastiblends India, Raghav Productivity Enhancers, SDC Techmedia, Sanathnagar Enterprises, Stratmont Industries, ... Read more »

Hot Stocks | Here is why you should buy Siemens, Motherson Sumi and Petronet LNG

Indian market began this week on a positive note with Nifty index surpassing 18,000 for the first time as PSU banks, auto and metal counters witnessed sharp upside moves. On ... Read more »

Centrum-BharatPe gets licence for small finance bank

The Reserve Bank of India (RBI) issued a Small Finance Bank (SFB) license to the consortium of Centrum Financial Services, and Digital payments platform BharatPe, said two people familiar with ... Read more »

Wall St lower, jitters ahead of earnings

US stocks have finished lower, extending losses late as investors grew more jittery in the run up to third-quarter earnings, while a jump in Tesla shares helped support the market. ... Read more »

Oil whipsaws in volatile session on energy crunch fears

Oil prices steadied after whipsawing in a volatile session on Tuesday, as traders weighed the effect that higher energy costs could have on the global economic recovery. Brent crude fell ... Read more »

RBI issues small finance bank licence to Centrum and BharatPe combine

The Reserve Bank of India (RBI) issued a Small Finance Bank (SFB) license to the consortium of Centrum Financial Services, and Digital payments platform BharatPe, said two people familiar with ... Read more »

Bank FD to fetch negative real interest with elevated inflation

Senior citizens and others depending upon income from bank fixed deposit (FD) schemes will be at the receiving end with the retail inflation exceeding the interest rates. The Reserve Bank ... Read more »

Nifty may hit 21,000 before any major correction; earnings, inflation extremely critical: Experts

The Nifty 50 finally crossed the 18,000 milestone on October 11, driven by the flow of money from new-age and institutional investors despite global weakness and the risk of inflation ... Read more »