Bank Nifty hits record high, tracking for biggest weekly gain
The Bank Nifty index soared to an all-time high of 47,303.65 today (December 8). This marks a 1% increase after the Reserve Bank of India's (RBI) monetary policy announcement. This year, the index has climbed over 10%, compared to a 15% rise in the benchmark Nifty 50 index. With a weekly gain exceeding 5%, the Bank Nifty is on track for its largest weekly jump since July 2022.
Banking stocks surge due to RBI's announcement
ICICI Bank's stock climbed over 6% this week, while State Bank of India, HDFC Bank, Axis Bank, and Bank of Baroda, saw gains of 5%, 6%, 9%, and 10%, respectively. The RBI's choice to maintain the repo rate at 6.5% for the fifth consecutive time played a role in the banking stocks' surge. RBI Governor Shaktikanta Das revealed that the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate stable and remain "actively disinflationary."
Bank Nifty clocked its earlier high on December 5
To recall, the Bank Nifty index reached its previous all-time high of 46,484.45 points on December 5. This was after the Bharatiya Janata Party's (BJP) victory sweep in three states during the assembly polls.
Here's what experts say
Experts foresee that margin pressure may continue in medium term, with the retail and SME sectors driving credit growth. Naveen Kulkarni of Axis Securities PMS expressed a preference for larger banks over smaller or mid-sized counterparts due to RBI's recent hike in risk weights on personal and credit card loans. Meanwhile, Aurodeep Nandi, India Economist and Vice President at Nomura, expects a cumulative policy easing of 100 basis points starting August 2024 as inflation moderates and growth headwinds intensify.
