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Informist, Friday, Mar. 21, 2025

MUMBAI – Analysts are bullish on banking stocks in the near term, with Bank Nifty regaining the 50000 points level this week. "Going ahead, we expect Nifty Bank to take some breather and consolidation around 50000 levels. In case of a decline towards 49500 levels, aggressive traders can create fresh long positions," ICICI Direct said in a note.

On Friday, the Nifty Bank index closed 1% higher at 50593.55 points, the highest level since Jan. 6. The index closed in the green every day this week. The overall market posted gains for the fifth consecutive session Friday, after going through a consolidation phase, owing to comfortable valuations and decline in selling by foreign portfolio investors. 

"Looking at the near term, we believe that if it (Nifty Bank) continues to hold above 50000 mark, the next target would be around 51000 which will coincide with its 200-day moving average and followed by 51300, so that's the target which we are aiming for the coming weeks. So your stop loss is 50000," Rajesh Palviya, senior vice president-research at Axis Securities, said.

"Buy-on-dips would be the strategy and private lenders can take more lead" as valuations are attractive, he said. In the case of public sector banks, Palviya believes there is still some consolidation left, which will depend on the earnings in the last quarter of 2024-25 (Apr-Mar).

Analysts expect earnings in the March quarter to be muted on account of macro factors. "I think Jan-Mar will be a slightly muted quarter because loan growth in the system has been hovering around 11% and therefore some of the large private banks may grow faster than system but overall loan growth has not materially picked up," Shibani Kurian, head - equity research, Kotak Mutual Fund, said. Deposit growth of the banking system lagged slightly behind loan growth, data released Friday by the Reserve Bank of India showed. Loans extended by banks rose 11.1% on year as of Mar. 7, while deposits were up 10.2%.

One needs to watch out for margins, because if there is a rate cut, there may be some incremental margin pressure as loans that are linked to the repo rate would have repriced downwards. Maybe going into next year, we should start seeing better earnings trajectory, Kurian said.

IndusInd Bank, which has been creating headlines for the past two weeks, saw some relief as its share closed 0.4% higher at INR 686.90 Friday. Shares of the bank had risen 2% to an intraday high of INR 700.80 on Wednesday. On Tuesday, IndusInd Holdings Chairman Ashok P. Hinduja had said the reports on derivative discrepancies at IndusInd Bank should be out next week after which the bank's board will identify the person responsible for the issue. Prior to this, the Reserve Bank of India had issued a statement saying it is satisfied with the bank's financial health with comfortable capital adequacy ratio and liquidity coverage ratio. The shares had tanked over 27% on Mar. 11 after the bank disclosed discrepancies in its derivatives portfolio.

TOP HEADLINES

* YES Bank receives INR 4.29 bln from trust in security receipts portfolio
* AU Small Fin Bank denies rumours about CFO resignation, RBI's special audit
* IndusInd Bank to hire independent firm to probe derivatives discrepancies
* Tamilnad Mercantile Bank appoints Sanjoy Kumar Goel as CFO effective Thu
* Bankers say source of IndusInd Bank's accounting flaw not a systemwide issue
* RBI article says banks showing increased liquidity preference
* IndusInd Bank raises INR 20 bln via three CD issuances Wednesday
* RBI meets urban co-op banks' heads; urges to be mindful of responsibilities
* IndusInd Bank raises INR 15 bln via CDs, plans more on Wed
* Should have reports on IndusInd Bank issue by next week, says Ashok Hinduja
* YES Bank gets INR 1.45-bln demand order from Mumbai tax department
* IndusInd Bank raised INR 110 bln through multiple CDs on Monday
* Will definitely order CBI probe, says SC on nexus between builder and banks
* No proposal under consideration to disinvest in 4 PSU bks by 2026, says govt
* PRESS: SBI delays INR 150-bln fundraising plan due to rising bond yields
* Moody's puts IndusInd Bk baseline credit assessment on review for downgrade
* RBI Malhotra tells fincl system members to improve customer svc, use more AI
* RBI says agency banks to stay open Mar 31 for govt transactions
* Banking Secretary Nagaraju refuses comment on IndusInd Bank issue
* RBI calls IndusInd Bk fincl health stable, seeks remedial action by Mar end

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Christina Titus

Edited by Ashish Shirke

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