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Informist, Friday, Jul. 11, 2025

MUMBAI – The Nifty Bank sectoral index is seen performing poorly next week and relying on technical support to prevent a further fall, according to analysts. From the fundamental point of view, bank stocks are seen to be struggling on account of the expected sluggish growth in profits for the June quarter.

The Nifty Bank largely moved in the band of 56,600-57,400 points this week. The sectoral index fell 0.4% Friday to close at 56,754.70 points, with seven of its 12 constituents ending in the red. The index had hit a record high of 57,628.40 earlier this month.

On the technical front, the Nifty Bank will see support at 56,600-56,300 levels and could then reverse the trend to approach the all-time high again. The possible lack of a trade deal between India and the US could push up demand for stocks in the banking and financial sector, if investors exit sectors such as pharmaceuticals, which are more prone to fluctuations in US trade policy, analysts said. However, they do not expect any sharp upward moves ahead of the June quarter results, since the performance of banks is largely expected to have been poor. In the worst case, if the index falls below 56,300 points, it could witness consolidation for the next 2-3 months, analysts said.

"We are cautious on the Bank Nifty in the near term, but see long-term positivity," said Swati Hotkar, associate vice-president for technical research at Nirmal Bang Institutional Equities. "The technical support of 57,000 has broken down, so the strong support for next week is 56,300 on the technical charts. Indices will continue to be volatile, but we see a buy-on-dips movement in the Bank Nifty. Short positions are not favoured at the current market price."

In a note, Bajaj Broking also said it expects a correction in the Nifty Bank in the near term, but added that the outlook for the longer term is positive, with buying interest likely when prices fall.

The recent price action in bank stocks indicates negativity, analysts said. "HDFC Bank is looking a bit weak," said Anshul Jain, head of research at Lakshmishree Investment and Securities. "Axis (Bank) and IndusInd Bank are a bit strong. But, again, if both heavyweights, ICICI (Bank) and HDFC (Bank) fall, all other banks will follow."

Selling pressure is seen to be more pronounced in shares of private-sector banks. State-owned banks are seen to be reporting better earnings for the June quarter than their private-sector peers, Emkay Global Financial Services said in a report earlier this week. In terms of valuation, stocks of public-sector banks are seen to be positive, with limited scope for a downside. Prashant Tapse, senior vice-president at Mehta Equities, recommends Canara Bank and Bank of Baroda among public-sector bank stocks, and Federal Bank in the private sector. He also has a positive view on large-cap non-banking finance companies.

Broking firms continue to maintain a positive outlook on Kotak Mahindra Bank after the Reserve Bank of India lifted restrictions on its digital services in February, and on AU Small Finance Bank. The latter has applied to the central bank for a universal banking licence.

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

End

US$1 = INR 85.80

Reported by Cassandra Carvalho

With inputs from Aaryan Khanna

Edited by Rajeev Pai

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