Bank stocks sizzle on credit offtake rise hope

CHENNAI: Reviving economy and rising inflation are driving investors to banking counters. The expectation is clear: Credit growth will gain momentum in future. Stocks of Allahabad Bank, Dena Bank, HDFC Bank and OBC hit their 52-week highs on Friday.

"Fortnightly data released by RBI indicates that credit growth remains lacklustre, increasing by just 9.8% Y-o-Y as on November 6, 2009. This was largely due to the high base of last year and lower credit demand so far this fiscal.

Sequentially, however, growth has improved and we expect the incipient economic revival and rising inflation to strengthen credit offtake in the coming months," Abhishek Agarwal and Ishank Kumar of Religare Hichens Harrison said in a note.

"Although the high base will restrict yearon-year growth until the end of December '09, we anticipate a 14-16 % Y-o-Y ramp-up in advances by March 2010 aided by the release of pent-up loan sanctions," they said.