Move negative for public sector banks which are heavily dependent on treasury gains.
In an interview to CNBC-TV18's Nigel D‘Souza & Reema Tendulkar, Vinod Kathuria, ED at Union Bank of India where he spoke about the bond yields and whether PSU banks are likely to see higher treasury gains.
Today, the PSU Bank index rallied over 3 percent, with Canara Bank and Punjab National Bank surging 6.7 percent and 4.9 percent, respectively, amid speculation that they would be beneficiaries of a roaring rally in bonds.
The Reserve Bank of India's interest rate cuts -- 1.5 percent since early last year -- has helped drive yields lower, enabling banks to book treasury profits and clean up their balance sheets, says Arundhati Bhattacharya, chairperson of State Bank of India.
Vishal Goyal, Executive Director-Leading Banks & Financial Research, UBS India, expects private banks to have earnings similar to Q2.
Deven Choksey sees good amount of participation from midcaps. However, he advises investors to exit non-quality stocks and stay invested in quality stocks.
Private sector banks continue to be the preferred bet over their peers in public sector space in the April-June quarter of the financial year 2012-13. While the former is likely to post a net profit growth of more than 20% year-on-year, the latter's net profit would grow at a slower pace of around 15% on an average barring SBI.