Though the country of India has had a particularly rough economic 2013, with a devaluing rupee and outdated corporate laws slowing growth and overseas investment, a handful of Indian financial institutions have begun showing signs of life in late 2013, with ICICI Bank (IBN) leading the way. ICICI saw significant gains the last two days, erasing a sizable portion of the banks YTD losses.
IBN Rises, Falls with Indian Economy
ICICI has not been immune to the contracting Indian economy, shedding some 15 percent of its valuation in 2013. Internal and external positive economic developments have assuaged fears their slide would exacerbate, leading many analysts to cite ICICI as a potential turnaround.
On the macro level, India has stopped the bloodletting with the installation of Raghuram Rajan as the Reserve Bank Chief. Rajan immediately instituted sweeping economic change to address monetary concerns, and has tempered Indian economic slide by strengthening India’s reserves greatly. ICIC has also benefited from Rajan’s move to issue more bank licenses in the country, expanding the reach of banks into previously “underbanked” rural areas of the country.
IBN Among Strongest Players in Segment
While all boats rise in high tide, ICICI has been singled out as a particularly strong contender to rebound in the coming months. In October Ajay Bodke of Prabhudas Liadher cited ICICI as the second strongest large cap Indian bank play, just behind HDFC Bank Ltd. (HDB) . ICICI also received high marks from Dhananjay Sinha of Emkay Global Financial Services.
Early December’s spike can be specifically attributed specifically to the finalization of a deal with steel manufacturer Stemcor to assist that company with a multibillion dollar asset sale.
On Dec. 6 ICICI rose 4.44 percent to hit $38.54 a share. Though the company’s shares were down 18.9 percent on the year prior to the day’s trading, they have experienced a nice uptick the last three months, gaining 18.5 percent in that time frame.