Indusind Bank, Federal Bank, Bob, Yes Bank Gained Up To 4% Today; What's Ahead?

Banking stocks specified arsenic IndusInd Bank, Federal Bank, Bank of Baroda (BoB), YES Bank and Axis Bank were trading up to 4 per cent higher successful Thursday's trade, moreover  the BSE Bankex was trading flattish. IndusInd Bank climbed 3.82 per cent to Rs 824.25 aft nan caller explanation connected nan MFI portfolio. Federal Bank precocious 1.25 per cent to Rs 202.30. Bank of Baroda, YES Bank and Axis Bank gained 0.5 per cent to 1 per cent.   

Nomura India said nan caller guidelines connected LCR should beryllium much beneficial for banks that person a higher reliance connected wholesale funding, arsenic these banks will apt spot a higher affirmative effect connected their LCRs owed to nan eased run-off rates for wholesale backing and little antagonistic effect from accrued run-off rates connected unit deposits. 

"As a result, mid-sized banks pinch comparatively weaker deposit franchises (such arsenic IndusInd Bank, AU SFB, Bandhan Bank) should use nan most. Among nan larger banks, continued liquidity-easing measures are affirmative for deposit-growth-constrained entities (such arsenic Axis Bank, HDFC Bank)," it said.

Nuvama noted that nan caller last LCR norms are little strict compared pinch nan draught of July 2024. While they are affirmative for nan full sector, nan cardinal beneficiaries would beryllium Federal Bank, IndusInd Bank and Kotak Mahindra Bank, this brokerage said.

Some brokerages are cautious connected nan banking assemblage outlook. Emkay Global said while lenders are enjoying beardown regulatory tailwinds – improved liquidity and easing of lending norms, these benefits are apt to peter retired soon. This it said is particularly existent for ample banks arsenic they look beardown separator unit owed to complaint cuts being deeper than primitively forecast. 

"The longer-term challenges for banks persist – wide maturation remains beneath nan RoE, frankincense starring to anemic BVPS; pockets of excess RoA/RoE proceed to beryllium competed away, and fintechs slow chipping nan franchise strengths of incumbents. These are not afloat captured successful nan valuations, contempt nan terrible P/B derating for backstage banks. We stay underweight and for illustration playing nan complaint rhythm via autos and nan larger user discretionary universe," nan brokerage said.

Kotak Institutional Equities said successful an uncertain world, an inexpensive valuation tin ever supply comfort, particularly successful a cyclical business. It noted that nan banking assemblage is not astatine cyclical lows that it had tested during Covid aliases during nan firm NPL cycle. 

"PSU banks person underperformed ample backstage banks successful caller times contempt nary concerns astir plus quality. SBI’s outperformance pinch its nationalist slope peers suggests a wide penchant to enactment pinch amended value names—a thesis that is worthy assessing," nan brokerage said.

The brokerage believes that nan strategy in installments could perchance turn slower than strategy deposits going up and that plus value deterioration, contempt fears, is improbable to materialise immediately. 

"This would connote that Axis Bank would beryllium positioned champion among nan ample backstage banks. SBI is apt to beryllium well-positioned successful this limb of nan cycle, wherever concerns are chiefly connected NIM," it said.
 

Published on: Apr 24, 2025 10:27 AM IST