Bank Nifty hits record high of 47,170, clocks biggest weekly gain since July 2022

The Bank Nifty took a 0.7 percent leap to hit a fresh lifetime high of 47,170.25 levels on December 8 as investors cheered the Reserve Bank of India’s monetary policy outcome. The Bank Nifty index is up over 5 percent this week and is on its way to clock its biggest weekly gain since July 2022.

The index has surged over 9 percent so far this year, as against a 15 percent rally in the benchmark Nifty50 index.

Among individual stocks, ICICI Bank was up over 5 percent this week, whereas HDFC Bank, Axis Bank, Bank of Baroda, and State Bank of India were up 6 percent, 9 percent, 10 percent, and 5 percent, respectively, during the same period.

Earlier, Bank Nifty had hit claimed an all-time high of 46,484.45 levels on December 5 after Bharatiya Janata Party’s (BJP’s) sweeping victory in 3 out of 4 state election results. Later, on December 8, the upsurge in banking stocks was fuelled after the RBI kept repo rates steady at 6.5 percent for the fifth consecutive time.

Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said that the MPC unanimously decided to keep the repo rate unchanged at 6.5 per cent and will remain ‘actively disinflationary.’

On the banking sector, analysts believe pressure on margins may continue in the medium term, wherein retail and SME segment would drive credit growth.

“With the recent move by the RBI to increase risk weights on personal and credit card loans, we expect credit growth to slow down in these segments. The Retail and SME segment would lead to credit growth hereon. Pressures on margins for banks will continue. Currently, we prefer the larger banks vs the smaller or mid-sized peers,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.

On the possibility of rate cuts, Aurodeep Nandi, India Economist and Vice President at Nomura predicted 100 basis point of cumulative policy easing starting from August 2024 as inflation moderates and growth headwinds gather.

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