Reuters Market Eye - Bank of America Merrill Lynch upgraded State Bank of India, Bank of Baroda (BOB.NS), and Oriental Bank of Commerce Ltd (ORBC.NS) to 'buy'.
The investment bank says upgrades come on the back of a steepening bond yield curve in the anticipation of RBI rate cuts, stronger-than-expected loan recoveries, and reduced quality pressures.
BofA Merrill also upgrades its price objectives for private banks, retaining ICICI Bank Ltd (ICBK.NS) as its top pick, and HDFC Bank Ltd (HDBK.NS) and Axis Bank Ltd (AXBK.NS) as its "preferred" names. All three banks have 'buy' ratings.
"Private banks will likely continue to deliver structurally superior earnings and RoEs, especially over the medium term," BofA Merrill says in a note dated Tuesday.
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India's economy probably lost momentum towards the end of 2015 on dwindling domestic and global demand even as the Reserve Bank of India (RBI) eased policy four times to boost growth last year, a Reuters poll found. Full Article