Karnataka Bank zooms 20%, hits over 3-year high on strong Q2 results

Shares of Karnataka Bank were locked in the 20 per cent upper circuit at Rs 112.55 on the BSE on Wednesday after the bank posted a record quarterly net profit of Rs 411 crore for the quarter ended September 2022 (Q2FY22). The net profit grew by 228 per cent compared to the net profit of Rs 125 crore in Q2FY22.

The bank said the significant jump in net profit is mainly because of improved earnings, improved asset quality, healthy growth of advances, cost containment, and efficiency enhancement among others.

The stock hit an over three-year high, and was trading at its highest level since June 2019. A combined 20.04 million shares have changed hands, and there are pending buy orders for 2.6 million shares on the NSE and BSE.

For Q2FY23,  the bank’s net interest income increased by 26 per cent year-on-year (YoY) to Rs 803 crore from Rs 637 crore in Q2FY22. The net interest margin improved to 3.56 per cent from 3.15 per cent in the year-ago quarter.

The bank's asset quality improved further as gross non-performing assets (GNPAs) dropped 67 basis points (bps) on a sequential basis to 3.36 per cent at the end of September quarter. Net NPAs dropped 44 bps sequentially to 1.72 per cent. About a year back, the GNPA was at 4.52 per cent, and NNPA was at 2.85 per cent.

Tech View

Outlook: Consolidation likely

Target: Rs 107

Support: Rs 103

Wednesday's 20 per cent jump in Karnataka Bank shares has pushed it sharply above the higher end of the Bollinger Band on the daily, weekly, and monthly charts. With this, the immediate support for the stock stays at Rs 103.3 (the higher end of the band in the daily chart), followed by Rs 100.8 (higher end of the band on the weekly chart).

While some sort of consolidation looks likely on the charts, as suggested by RSI and slow stochastic indicators, the stock may rally towards Rs 106.93, and then towards 110.5 levels if it stays above the said support levels, show the yearly Fibonnaci chart.   

Meanwhile, all the moving averages are trading with positive crossover, supporting the upside momentum. 

(With inputs from Nikita Vashisht)