Nifty Bank hits fresh record high, crosses 44,000 mark for first time

Aided by strong credit growth and improving net interest margins amid rising interest rates, Bank Nifty today crossed the 44,000 mark for the first time and hit a record high of 44,151.8. Also, Indian stock markets rose today based on strong global cues and lower-than-expected inflation data from the US.

“Financials continue to outperform on the back of strong credit growth, where non-food bank credit grew 18.3% in October 2022 vs 6.9% a year back, along with improving balance sheets, where most of the provisioning for bad assets is behind us with improving NIMs due to increasing interest rates where assets are getting re-priced faster than liabilities for banks,” Nishit Master, Portfolio Manager at Axis Securities PMS, said.

“We expect this outperformance for banks and the tailwind for the sector to continue for 2023. In the short term, after yesterday's inflation print in the US, there is an expectation in some quarters that the US Fed might turn less hawkish in the upcoming policy, which will support the markets,” he added.

Among Bank Nifty stocks, IDFC First Bank surged 4.5%, while AU Small Finance, IndusInd Bank and SBI also rose over 1% today.

However, PSU bank stocks outperformed private sector bank stocks. Among PSU bank stocks, UCO Bank surged nearly 14%, while Indian Overseas Bank and Bank of Maharashtra increased by over 4%.

In Q2, most PSU banks reported stellar earnings coupled with improvement in asset quality and rising credit growth numbers. Besides, state-owned banks also reported healthy NIMs, which analysts believe might be sustainable for another quarter as rising deposit rate hikes may be passed with a lag.

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