The sharp surge in bank stocks pushed the Nifty Bank index up nearly 3% to near 51,600 in the morning trading hours, following a massive selloff earlier in March. Punjab National Bank (PNB), AU Small Finance Bank, IndusInd Bank, Canara Bank, Axis Bank, State Bank of India (SBI) and a few others gained 3–4%, while ICICI Bank, HDFC Bank and others gained around 2% each.
The index tracking banking stocks had plunged more than 10,000 points (nearly 17%) in March, wiping off significant amounts of investors’ wealth as the war in the oil-rich Middle East raised inflation worries and rattled global markets.
However, bulls returned to Dalal Street today after the March selloff. Sensex rallied around 2,000 points while Nifty surged above 22,900, in line with global peers after US President Donald Trump said the country could end its military attacks on Iran within two to three weeks and that Tehran did not have to make a deal as a prerequisite for the conflict to ease. Iranian President Masoud Pezeshkian meanwhile said that the country had the “necessary will” to end the ongoing war with Israel and the United States, but was seeking guarantees that the conflict would not be repeated.
What lies ahead?
The broader market optimism spilled over to banking stocks, which earlier saw a steep correction. “In the March series, the Bank Nifty suffered the worst cut with a crash of around 17%. This segment holds the promise of a sharp recovery when the market bounces back. Leading private sector banks have been beaten down on non-fundamental issues. For long-term investors, this presents a buying opportunity,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
The sharp selloff seen on Monday in bank stocks was also driven by the RBI’s move to tighten position limits on onshore rupee forex exposures to $100 million per bank, with compliance required by April 10.
Bajaj Broking had noted that Bank Nifty needs to establish a sustained pattern of higher highs and higher lows, along with a close above last week’s high of 54,150, for any meaningful pause in the previous downtrend.
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