Bank Nifty Surge and Market Performance
The Bank Nifty index experienced a significant surge, increasing nearly 2% on Monday to surpass the 55,000 mark for the first time. The index closed at a record high of 55,304.5, while it rose 2.15% during intraday trades.
Key Factors Behind the Surge
- Foreign Portfolio Investors (FPIs): Renewed buying interest by FPIs significantly contributed to the rise.
- Strong Quarterly Results: Large private sector lenders like HDFC Bank and ICICI Bank posted impressive quarterly results.
- Positive Macroeconomic Environment: Overall favorable macroeconomic conditions supported the surge.
Performance of Major Banks
- HDFC Bank: Closed at a record high of Rs 1,925.2 per share.
- ICICI Bank: Ended at a record high of Rs 1,408.1 per share.
- HDFC Bank's standalone profit after tax (PAT) grew by 6.7% to Rs 17,616.14 crore.
- ICICI Bank's standalone net profit increased by 18% to Rs 12,630 crore in March 2025.
Foreign Portfolio Investors (FPIs) Activity
FPIs showed increased buying interest in banking stocks, despite having sold Rs 4,501 crore worth of financial services stocks in the first half of April.
Valuation Insights
- The Bank Nifty index is trading at around 2.3 times book value and about 14 times trailing earnings.
- Valuations remain below the five-year peak levels, indicating potential for further growth.
Outlook for the Banking Sector
- Analysts remain optimistic due to robust credit growth and stable asset quality.
- Potential repo rate cuts by the RBI may influence banking sector performance in FY26, with potential challenges in the first half.
- Banks like HDFC and ICICI have reduced savings deposit rates in response to expected rate cuts.