Measures such as removal of surcharge on foreign portfolio investors (FPI) and removal of CSR violation as the criminal offence will cheer market participants
Finance Minister Nirmala Sitharaman on August 23 unveiled a slew of measure to boost growth, increase liquidity, and revive consumer and investor sentiment in the Indian economy.
The announcement couldn’t have come at a better time as the Indian businesses have reported a muted earnings in June quarter. Coupled with a trade war that could lead to the global recession and corporate governance issues, it has dented sentiment.
Measures such as removal of surcharge on foreign portfolio investors (FPI) and removal of CSR violation as the criminal offence will cheer market participants.
The surprise was the recapitalisation of banks that was not expected at this point in time. "We rather expected sector-specific measures, which would have been related to automotive, consumer space or so. PSBs like SBI, BOB and PNB may see some incremental improvement in their net-interest margins," said Mustafa Nadeem, CEO at Epic Research.
The Rs 70,000 crore recap of PSU banks announced in the Budget is being advanced, although the timeline is not disclosed. The nudge to PSU banks to link home, SME and vehicle loans to repo could help credit growth, but dampen margins unless banks cut deposit rates.
Banking names are trading mixed with Nifty Bank trading flat to negative. Bank of Baroda, Punjab National Bank, RBL Bank and State Bank of India have gained. The top losers include IndusInd Bank, YES Bank and Federal Bank.
The PSU Bank index jumped close to 2 percent led by gains from Central Bank of India, Bank of India, Bank of Baroda, Indian Bank, Oriental Bank of Commerce and Union Bank of India.
Technical Analyst Mitessh Thakkar of mitesshthakkar.com has a sell recommendation on Kotak Mahindra Bank with a stop loss of Rs 1,511 for a target of Rs 1,450.
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