Over the past few years, Equity Research has lost its sheen as it seldom predicts the future course for the market. One such classic case is that in India where corrupt Policy Makers are hardly worried about the Economy and the RBI & Finance ministry unable to control the Vital Economic Parameters resorted to extreme measures of sucking back the liquidity on July 17th and July 23rd. Since then in 10 Trading Sessions, the Banking stocks have been hammered by upto 50% from their 2013 Highs.
Morgan Stanley the mover and Shaker of the Indian Equity Market just a while ago come up with a Report stating Bear Case Firmly in Play for the Indian Financial Sector [10 Days after the Policy Maker’s Moves]. They are of the opinion that there maybe rallies but we would sell these. Macro is unwinding; They believe next 3-4 quarters will see sharp spikes in impairments (slowing growth and higher rates).
Morgan Stanley’s Stock Target Price for Various Banks is as Follows,
Overweight Rating
HDFC Bank – 725
HDFC – 910
ICICI Bank – 990
LIC Housing Finance – 195
EqualWeight Ratings
Indus Ind Bank – 425
Yes Bank – 325
Oriental Bank – 145
Bank of Baroda – 500
Underweight Banks
Kotak – 530
Axis Bank – 900
Bank of India – 135
PNB – 400
SBI – 1200
Canara Bank – 170
So did it take 10 Working Days to Analyze the impact of RBI Move or was it intentional on behalf of the FIIs to let them Unload their Stock first and then the Panic Follows for the rest ? We’ll leave it upto the readers to Decide.