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Contents
Allahabad Bank Management Meet Update; No major worries; Buy; Target: Rs300
n We recently spoke to the management of ALBK on the liquidity squeeze, rising costs and movement in NPAs
n ALBK’s NIMs are likely to be maintained at 3.0% (calculated) for Q3FY11 however, they may see marginal dip in Q4FY11. We have already built in 30bps contraction for H2FY11
n The slippages are likely to be controlled at 1-1.2%. Upgrades in one large account possible in Q4FY11. The provisions may go up due to MTM losses in AFS bond portfolio
n Valuations attractive at 1.4x FY11E/1.1x FY12E ABV. We maintain our BUY rating with price target of Rs300 (at 1.5x FY12E ABV). Remains our top pick in mid-sized PSU banks
n Dealer Comments
The markets started the day’s session on a positive note with almost 40 odd point’s upward gap tracking mixed cues from the global markets particularly the weaker Asian markets after surviving the china interest rate scare yesterday. Post positive opening markets were just struggling to stay afloat and kept on trading lacklustrely for the entire day on very low volumes. And even a semblance of volatility, associated with an impending derivatives series expiry, was conspicuous by its absence. The choppy session saw good buying in healthcare, fmcg and power stocks while selling in auto, banking and capital goods kept the indices under control. Finally the markets closed the day on a marginal negative note towards the end with Sensex losing a mere 4 points or 0.01% lower to settle at 20025 levels while Nifty lost just 2 points or 0.04% lower to settle at 5996 levels. The overall market breadth indicating the strength of the market was marginally positive as broader markets witnessed subdued action with Midcap index and Smallcap index gaining almost 0.20% each and was at almost 1.1 x. The overall traded volumes were lower compared to the earlier day by almost 11% and were at Rs 1064 bn. While delivery based volumes were marginally lower compared to the earlier day at 35.1% of the total traded turnover. Among the Fund activities FII’s were net buyers to the tune of Rs 2.67 bn on 27th December 2010. While on 28th December 2010 FII’s were net buyers to the tune of Rs 1.09 bn in the cash segment while in the F&O segment FII’s were net buyers to the tune of Rs 1.81 bn while Domestic Funds were also net sellers to the tune of Rs 2.65 bn.
n Technical Comments
Flat session – status quo
Again a flat session for Indian markets, with Nifty going nowhere and just oscillating around the 6000 mark – a perfect status quo situation, where the key observations and the view remains same as that of the previous session. Also the volumes were pretty slim as the traders’ contribution was low because of the ongoing holiday season. So, the viewpoint remains bullish with hourly averages and higher top higher bottom formation in place. Hence one should look for buying on dips in range of 5993-5980 for the target of 6080. The reversal for this view is packed at 5940.
Bank Nifty:
Bank Nifty is too trading within a broad range of 300 odd points and the break above 11571 or below 11411 will be a good opportunity to initiate a fresh intraday trade for the coming session.
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