Bank for the buck

.....For starters, banks — a proxy for the economy – will see a rebound in credit growth next year, as gross domestic product growth revives. Typically, when interest rates come down, stock prices tend to go up. Citi is positive on the sector and sees “reasonable returns on improving macros and bottoming micros”. As for PSU banks, the broader perception in the market is that asset quality has started improving and once the Reserve Bank of India ( RBI) starts cutting rates, things would improve. The market is building in rate cuts and a consequent uptick in loan growth in FY14. Ambit Capital expects PSU banks to outperform in the near future, as it sees signs of these stocks bouncing back from their relative lows. The market expects PSU banks to end the year with earnings growth of 11 per cent.......

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