Icicibank Fundamental and Technical Analysis

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ReporT ON Fundamental and technical analysis of icici bank
Valuation-ICICI BANK

Snapshot of ICICI Bank

Market Capitalization: 101416 crores
Free Float Factor : 1.0
52 week low : 641(NSE)
52 week High : 998.80(NSE)
Performance of ICICI stock versus NSE

Fundamental Analysis

Macroeconomic Analysis

Economic Indicators:
1. GDP Growth
2. Inflation
3. Liquidity
4. Interest Rate
5. SLR and CRR
6. Dollar Exchange Rate and Dollar Index
GDP Growth:
The GDP growth has slowed down over the past half year with Q4 FY2012 and Q1 FY2013 reported to be 5.3% and 5.5% respectively which is lowest in 9 years. The GDP growth for the fiscal 2011/12 stood at 6.8% which is far cry from the GDP growth of 8% India had been experiencing over the most part of past decade. This indicates a general slowdown of Indian economy.

Forecast:
The GDP growth rate is expected to improve over the next few quarters with expected expansionary monetary measures expected to fuel the growth.

Inflation:
Inflation has persistently remained high over the past few years. During 2010 and much of 2011 the impact was curtailed by high GDP growth but with the economy slowly and gradually cooling the high inflation has been deterring any monetary measure from the Central Bank. The Inflation has come down quite significantly this year and has been hovering around 6.7-7.5% (WPI inflation) for the past 5-6 months which is still above the comfort zone of RBI as the low GDP growth is inhibiting any rate cuts though RBI cut the policy rates by 50 bps (the first time RBI has cut rates in 3 years) to provide impetus to the slow industrial and economic growth.

Forecast:
The inflation is expected to cool down from the current levels in coming months prompting monetary measures. Liquidity:
Liquidity has huge impact on economic growth as low liquidity in the market would imply lower lending and high rate of borrowing thereby there by hindering the growth. The liquidity situation has remained pretty grim over the past 3 quarters as indicated by the borrowings under LAF-Liquidity Adjustment Facility which reached a peak of 2 lakh crores during the month of March on account of falling rupee as RBI had to intervene time and again to provide support to the rupee in form of buying rupee and selling dollars thereby tightening the supply of Rupee in the market. The liquidity situation has eased since last quarter and the borrowings have come down in the comfort zone of RBI (60 lakh crores which is plus/minus 1% of NDTL).

Forecast:
The easing of liquidity augmented by falling call rates implies lower cost of borrowings and prompts new investment and projects being undertaken. Interest Rate:
RBI for the first time in 3 years cut the policy rates (both Repo and Reverse Repo) by 50 basis points to spur economic growth which has come down to 6.5%. Year on year basis. Forecast:
RBI is expected to further cut interest rates further by 50 bps in coming months which is positive signal for Banking Industry as it directly improves their net interest margin. SLR and CRR:
SLR or Statutory Liquidity Ratio is the amount that banks and financial institutions are supposed to invest in Gov. Securities/gold etc. CRR or Credit Reserve Ratio is the percentage that banks are supposed to maintain with RBI. These are monetary policy measures. Any cut in SLR and CRR signifies increased liquidity and vice versa though in recent times SLR has proven to be a blunt tool as banks already maintain higher than minimum stipulated percentage specified by central bank

Dollar Exchange Rate and Dollar Index:

In recent times economies world over are parking their money in dollars in wake of rising uncertainties in equity market and the boil down in Europe over financial crisis in PIIGS economies. This phenomenon being known as Flight to safety as world economies are purchasing the strongest currency in the world at present...
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