Nifty Bank hits record high led by IndusInd Bank, Kotak Mahindra Bank, HDFC Bank

Nifty Bank index hit a record high in the early trade on Monday led by strong buying in banking heavyweights. The index gained nearly 1% to hit an all-time high of 44,440.15, crossing its earlier level of 44,151.8 hit in October 2022.

All the constituents of the Nifty Bank index were trading in the green led by IndusInd Bank, AU Small Finance Bank, Kotak Mahindra Bank and HDFC Bank rising more than a percent each, followed by Bandhan Bank, Axis Bank, Federal Bank, SBI and Axis Bank gaining over half a percent each. 

Nifty Bank has gained over 3% this year so far, while the index has rallied more than 25% in the last one year period. 

The recent rally in banking shares was boosted by healthy earnings beat led better margin performance and improving asset quality.

Most banks reported a healthy earnings beat in Q4FY23, mainly led by continued strong credit growth, healthy margins, higher recoveries from written-off accounts and lower LLP, as asset quality continues to improve.

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During FY23, the banking sector reported strong financial performance with a few banks clocking their decadal-best RoA, mainly aided by robust growth, margin delivery in a rising-rate cycle, and improving asset quality in a post-Covid era. 

On the technical front, analysts believe Nifty Bank may face intraday resistance at 44,194, 44,370 and 44,673 levels, while support is placed at 43,715, 43,413 and 43,237 levels.

ICICI Direct expects the index to surpass gradually head towards 45400 levels in a non-liner manner in the coming month as it is 123.6% extension of the entire December 2022-March 2023 decline (44151-38613).

“However, after the recent sharp up move of 15% in the just eight weeks the weekly stochastic are at an overbought territory with a reading of 93. Hence, a breather of couple of weeks in the broad range of 44200-42500 cannot be ruled out. It should not be seen as negative. Instead dips should be used as buying opportunity,” ICICI Direct said. 

Meanwhile, the benchmark indices Sensex and Nifty were also trading with strong gains. The Sensex was trading 440.04 points, or 0.70%, higher at 62,941.73, and the Nifty rallied 116.55 points, or 0.63%, to 18,615.90.

The life-time high for Nifty is 18,887.60, and for Sensex is 63,583.07.

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