Banking shares remain gloomy as RBI pours cold water on rate cut hopes

Yes Bank Ltd. | Bank - Private | BFSI | BSE: 532648 | NSE: YESBANK

24 Aug 2012 Evaluate

Banking shares were trading under pressure after the Reserve Bank of India (RBI), pouring cold water on the hopes of rate cuts in upcoming mid-quarterly monetary policy review, in its ‘Annual Report for 2011-12’, a review of the previous fiscal year's macroeconomic conditions and outlook for the current year, stated that “Lower interest rates alone are unlikely to jump-start the investment cycle”.

Underscoring that fighting inflation remained the cornerstone of its monetary policy, even in light of sagging economic growth, India’s most aggressive central bank, urged the government to cut expenditure and revive capital expenditure to crowd-in private investment, stating the limited fiscal and monetary space it had to provide direct stimulus to growth

Yes Bank is currently trading at Rs 345.85, down by 8.55 points or 2.41% from its previous closing of Rs 354.40 on the BSE. The scrip opened at Rs 354.30 and has touched a high and low of Rs 354.30 and Rs 343.00 respectively. So far 142808 shares were traded on the counter.

Axis Bank is currently trading at Rs 1072.60, down by 21.95 points or 2.01% from its previous closing of Rs 1094.55 on the BSE. The scrip opened at Rs 1089.00 and has touched a high and low of Rs 1089.00 and Rs 1067.00 respectively. So far 87490 shares were traded on the counter.

Bank of India is currently trading at Rs 275.30, down by 5.40 points or 1.92% from its previous closing of Rs 280.70 on the BSE. The scrip opened at Rs. 280.00 and has touched a high and low of Rs 280.00 and Rs 274.25 respectively. So far 27434 shares were traded on the counter.

The Reserve Bank of India, for 2012-13, is expecting the growth to remain below earlier estimate at around the previous year’s level of 6.5 per cent. India's growth has hobbled to a nine-year low of 5.3 percent in the March quarter, with many economists slashing their 2012/13 estimates to around 5.5 percent, lower than the RBI's downwardly revised projection of 6.5 percent. Further blearing this outlook, RBI highlighted that newer uncertainties for growth have emerged from unsatisfactory monsoon so far, which is likely to result in contraction in food grains output in 2012-13.

Meanwhile, blaming emergence of twin deficits, fiscal and trade, during 2011-12 a major cause of macro-economic weakness, current assessment of the Apex Bank suggested that the two demons would the keep their heads tall in 2012-13 in the absence of sufficient policy response and no improvement in business cycle conditions. “With growth remaining slow, budgetary targets are at risk. Shortfall in indirect tax revenue, decline in corporate earnings, difficulties with disinvestment and expenditure overshooting due to under-provision of petroleum subsidies are likely to put fiscal position under pressure,’’ the report said.

Yes Bank Share Price

24.86 -0.09 (-0.36%)

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Peers

Company Name	CMP
HDFC Bank	796.05
ICICI Bank	1387.90
Axis Bank	1376.55
Kotak Mahindra Bank	409.00
Indusind Bank	918.80
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