Banking stocks take a tumble, but analysts optimistic

The huge build up in the share prices of banking stocks in the previous year, has been followed by a strong pull-back in the current year. What started off as a broad market linked correction, has continued like an unabated run. But analysts still remain optimistic over the long-term prospects of the sector.

Written by Hemang Palan

March 20, 2008 22:45 IST

The share price of ICICI Bank has depreciated by 21% on Bombay Stock Exchange (BSE) in the past two weeks after the minister of state for finance PK Bansal informed the Parliament on March 4 on losses worth $264.34 million suffered by ICICI Bank?s international operations .

However, analysts are bullish on the performance of the Indian banks? stocks in the long run. Motilal Oswal, chairman and managing director, Motilal Oswal Financial Services Limited said, ?The high volatility, currently observed on BSE in the share prices of sub-prime affected Indian banks, is a short-term and a temporary effect. The decline observed in the share prices of ICICI Bank, State Bank of India, Bank of India and Bank of Baroda has more to do with other global parameters than merely the sub-prime crises in the US. I foresee the scrips of these banks to appreciate by about 18% over a period of three to five years.?

This article was first uploaded on March twenty, twenty eight, at forty-five minutes past ten in the night.