By Siddhant Mishra
There was a marginal recovery in the banking stocks on Monday, following the crash on Friday in the aftermath of the rout in Adani Group stocks. The Bank Nifty edged up by 42.15 points, or 0.1%, to 40,387.45, with Bank of Baroda, ICICI Bank and IDFC First Bank rising between 0.89% and 1.6%.
The BSE Bankex edged up to 45,795.60, a marginal rise of 0.09%, or 40 points, indicating some relief. Bank of Baroda, which was the biggest laggard last week, was the top gainer at 0.76%, with Federal Bank and Kotak Mahindra Bank closing in the green.
“The Bank Nifty saw a sharp correction over the past three to four sessions, slumping from 43,000-levels to 39,400 levels. There has been a short-term selling pressure in the banking counter. We see the hurdle at 40,800-levels, and once this is breached, we could see an upside of another 500-800 points. However, below this, the sell-on bounce could continue and the sector may remain under pressure,” said Chandan Taparia, head (technical and derivatives research), Motilal Oswal Financial Services. He refused to speak on Adani Group stocks citing their highly volatile nature.
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Data show that IndusInd Bank has been the biggest loser among private lenders, with the market cap falling Rs 9,638 crore since January 24, a loss of over 10%. The lender was down close to 2% on the NSE on Monday, and around 2.6% on the BSE.
Among public sector banks, Bank of Baroda has shed over Rs 10,000 crore in market cap, a drop of 11%. However, the lender edged up 0.76% on Monday on the BSE and 1.6% on the NSE.
Market analysts say the negative perception seems to be fading away. “… now, the dark clouds hovering over the Adani Group stocks are clearing, thanks to the FPO going through,” said Deven Choksey, MD of KR Choksey group, wondering why this issue is being raised when the Adani Group has not defaulted on its loans.
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Independent market analyst Ambareesh Baliga said the impact of the Hindenburg report on the sector was mostly sentimental, and some bounce-back to the tune of 7-8% is likely in stocks that shed over 10%. He said it is too early to talk about any default or impact on the NPA figures because of the exposure to Adani Group firms.
“We have seen the best in terms of NIMs and good news on the credit growth and NPA recovery fronts has already been priced in. This is why PSU banks have seen a rally in the recent past. However, the medium-term view is that most of the good news has been priced in,” said Baliga.