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MARKET EYE-Indian banks shares drop; risks remain, UBS says

Monday, 8 Oct 2012 | 5:55 AM ET

* Shares in Indian banks hit by heavy profit-taking after recent fiscal and economic reforms had sparking a rally in the sector by raising the raised the prospect of potential RBI rate cuts. * The government last week also announced proposals to allow more FDI into the insurance sector and to open up the pension sector for overseas investments, although both measures would need to be approved by parliament.

* However, UBS warns implementation risks for the government reforms remain high, while noting Indian banks are still facing challenges such as inflation, high leverage by companies, and non-performing loans in a noted dated on Friday. * State Bank of India

shares fall 3 percent after surging 21.5 percent from the start of September to Friday's close. * ICICI Bank falls 1.3 percent.

(manoj.dharra@thomsonreuters.com)

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ICICI Bank Ltd
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