Banks may trade within range

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news State Bank of India |

CNBC-TV18s Managing Editor, Udayan Mukherjee - Inflation number was a bit of shocker last week and to that extent banks have corrected. Banks had a great run and one has to see that in perspective. Most of the banks ran up 40-50% from their recent lows. The bigger ones like ICICI Bank , SBI from their peaks maybe just about few days back have given up about 15% from the top. So they have corrected and maybe that correction was overdue because they rallied too hard. But if one just looks at numbers in perspective even after correcting about 15% from their recent peaks a few days back, they are still about 30% higher from their previous lows.
 
So stocks haven't gone back; SBI has fallen 15% but hasn't gone back to Rs 1,000 from where the rally started, ICICI Bank has also corrected but it is nowhere close to Rs 520 from where it bounced, it is close to Rs 650. So the key thing to note now is whether banks will go back because of the inflation, crude concerns, closer to their old lows or this time around they will not go around that much and keep hovering in this range. My own sense is that banks probably are forming a range now; with the lows of a month back as probably the bottom and the highs what we saw 10 days back as probably the top and they will probably swing within that trading range.
 
When inflation numbers are bad or crude goes up, they will probably drift down closer to the lower end and on any anticipation that interest rates are topping up. They will probably drift back to the top end of range. But at lower levels, the recent lows, the valuation will probably support some of the bank stocks.  No runaway is expected, they will probably trade within this trading range that seems like the more likely scenario here.