Nifty Bank rises for fourth-straight session, hovers near 52-week high level on strong gains in HDFC Bank, ICICI Bank

Nifty Bank surged more than 2% on Thursday, edging close to its 52-week high level. This marked the fourth consecutive session of gains for the index, driven by a robust uptick in ICICI Bank, State Bank of India (SBI), Kotak Mahindra Bank, HDFC Bank, and Axis Bank shares. Leading private banks, HDFC Bank and ICICI Bank, reached their respective all-time highs during intra-day trading in anticipation of the March 2025 quarter (Q4FY25) earnings. HDFC Bank and ICICI Bank are set to release their Q4FY25 results on Saturday, April 19, 2025. Kotak Mahindra Bank was trading close to its 52-week high levels.

All banking stocks, including IndusInd Bank, Canara Bank, Bank of Baroda, Punjab National Bank (PNB), Federal Bank, and AU Small Finance Bank, were up over 0.5%-1%, except for IDFC First Bank, which experienced a decline.

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, stated that Nifty Bank witnessed a stellar rally this week, gaining nearly 6.5% and coming close to its all-time highs. The surge was well-supported by both private and PSU banks.

“Going forward, we maintain a positive outlook; however, after such a sharp move, a 'buy on dips' strategy would be more prudent. Immediate support is placed at 53,500–53,000, while on the upside, a move toward 56,000 looks likely in the coming days,” said Bhosale.

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Motilal Oswal Financial Services has picked ICICI Bank, SBI, and AU Small Finance Bank as its top recommendations from the banking space. ICICI Bank is projected to excel due to strong loan growth, high asset quality, and impressive returns, aiming for a RoA/RoE of 2.2%/17% by FY27E. The standalone institution is valued at 2.2x FY26E ABV, adjusted for its subsidiaries, as per the brokerage's analysis.

According to the brokerage report, HDFC Bank is tackling short-term challenges following the merger, such as elevated credit-deposit ratios and costly borrowings, by prioritising deposit collection and adjusting its balance sheet. The bank is improving operational efficiency to ensure expense ratios remain stable while still making investments. The cost-to-income and cost-to-asset ratios are projected to fall to approximately 40% and 1.7%, respectively, by FY27.

SBI is strategically poised for long-term growth, supported by healthy credit growth, managed asset quality risks, and a rapid advancement in digital transformation.

“We project a 9% earnings CAGR over FY25-27E, with RoA/RoE expected at 1.06%/16.8% by FY27E. The standalone bank currently trades at 1.0x FY26E ABV,” said Motilal Oswal Financial Services.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.