This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

10 Indian Banking Stocks to Watch

NEW YORK ( Karvy Global) -- HDFC Bank (HDB - Get Report) and ICICI Bank (IBN) are among the Indian bank stocks that have the potential to appreciate despite a recent selloff.

Over the past two weeks, Indian bank stocks plummeted on concerns about the European debt crisis and India's housing loan scandal, in which authorities arrested bank executives in connection with alleged bribery and fraudulent loans.

Adding to the selling were worries about margin pressure because of a rise in deposit rates and slower growth. The declines caused India's BSE banking index to fall 7% in the first two weeks of December.

To be sure, Indian banks will face pressures in an environment of rising interest rates. But the impact will vary depending on the bank. Banks that have a higher percentage of low-cost deposits, such as State Bank of India (SBIN:Mumbai), Punjab National Bank (PNB:Mumbai) and HDFC Bank, will fare better.

So will IDBI Bank (IDBI:Mumbai) and ICICI Bank (IBN), which have hiked lending rates, thereby limiting the negative impact on their margins. We expect margin pressures to become visible over the next two quarters.

In the current fiscal year, Indian banks have managed credit growth of around 10%, which is lower than the Reserve Bank of India's target of 20% for 2010-2011. Nonetheless, we expect robust domestic growth, higher capital expenditures and working capital demand across industries to accelerate credit growth during the next two quarters.

Concerns about the banking sector's exposure to sectors like telecom and real estate surfaced recently. However, the overall exposure to these sectors is around 4% to 5%, and these loans are backed by adequate collateral.

The government is proposing to infuse $2.25 billion into nine banks to shore up their capital bases and fund future growth. The bank that is expected to see the biggest increase in its book value from this infusion is Bank of Baroda (BANKBAROD:Mumbai), followed by Union Bank of India (UNIONBANK:Mumbai).

We have identified large-cap Indian banking stocks that could appreciate. The banks listed here have the advantage of a strong deposit base, better asset liability management, and strong asset quality. They are ranked in ascending order of average upside expected by analysts.
1 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
HDB $62.87 0.00%
IBN $7.05 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs