Nifty Private Bank index up 1% in weak market; IndusInd, Kotak, HDFC lead

Shares of select private sector banks rallied up to 6 per cent on the National Stock Exchange (NSE) in Wednesday's intraday trade in an otherwise weak market. At 11:36 AM, the Nifty Private Index, the top gainer among sectoral indices, was up 0.55 per cent, as compared to 0.51 per cent decline in the Nifty 50. The Private Bank Index gained 1.1 per cent in the intraday trade.

 

Shares of IndusInd Bank, Kotak Mahindra Bank, HDFC Bank, and City Union Bank from the index were up in the range of 1 per cent to 4 per cent. ICICI Bank shares, meanwhile, were flat at Rs 1,247 on the NSE.

 

 

Among individual stocks, IndusInd Bank gained 6 per cent to Rs 694.70 on the NSE in the intraday trade on the back of heavy volumes. The stock price of the private sector lender bounced back 15 per cent from its intraday low Rs 606.

 

On Tuesday, IndusInd Bank's shares tanked 27 per cent after the bank said accounting discrepancies in its forex derivatives portfolio may drag its net worth by 2.35 per cent or Rs 1,580 crore in the March quarter of the current financial year (Q4FY25).

 

However, IndusInd Bank's Managing Director (MD) and Chief Executive Officer (CEO), Sumant Kathpalia, assured investors that despite a Rs 1,500–Rs 1,600 crore impact on its derivatives portfolio, the bank expects to remain profitable in Q4FY25 and has taken necessary steps to manage the situation.

 

Chairman Ashok Hinduja, too, reaffirmed the promoters' full support, stating they are ready to inject additional capital, if needed. The promoters are also awaiting the Reserve Bank of India's (RBI's) approval to increase their stake from 15 per cent to 26 per cent, further strengthening the bank's position. Despite these challenges, the bank maintains a strong capital adequacy ratio well above 15 per cent.

 

The resignation of the CFO, the CEO's short tenure extension, and the forex derivative markdown have added negative pressure on IndusInd Bank's valuations. Despite promoters support and confidence, healthy capital adequacy and liquidity, uncertainty looming around leadership and business processes is expected to keep valuation in a narrow range in the near-term, ICICI Securities said in a note.

 

Meanwhile, share price of Kotak Mahindra Bank hit a 52-week high of Rs 1,997.70, gaining 3 per cent on the NSE in the intraday trade. Thus far in calendar year 2025, the stock has rallied 11 per cent. In comparison, the Nifty 50 and Nifty Private Bank index were down 5.6 per cent and 4 per cent, respectively, during the period.

 

In the October to December 2024 quarter (Q3F25), Kotak Mahindra Bank reported a stable performance despite multiple headwinds, including economic volatility and the RBI's embargo. On a consolidated basis, the growth was driven by a well-diversified portfolio, with strong contributions from secured lending, SME advances, and capital market-related subsidiaries.

 

Stress in unsecured lending, particularly in credit cards, has shown signs of stabilisation, while personal loans have seen improvement. The bank's tight cost control, robust capital adequacy, and stable margins highlight the bank's operational strength and adaptability. With a cautious yet optimistic approach, the management remains confident about sustaining growth, supported by technology-driven transformation and a balanced strategy to scale across segments, analysts at KRChoksey Shares and Securities said in their Q3 results update.

 

That apart, HDFC Bank shares were up 2 per cent at Rs 1,716.10 in the intraday trade on the back of heavy volumes. Neearly 4 million equity shares have, collectively, changed hands on the NSE and BSE. The stock had hit a 52-week high of Rs 1,880 on December 9, 2024.

 

Analysts at Axis Securities had pointed ourt that HDFC Bank was an outlier among banks, during Q3FY25 results season, because of its strong asset quality performance, given the rising stress, especially in the unsecured segment.

 

"Thus, supported by adequate levers to improve NIMs, controlled opex growth and improving productivity ensuring cost ratio moderation, and pristine asset quality, HDFC Bank should be able to deliver an improving trend on return ratios ahead," they noted in their Q3 review report.

 

While slippages in Q3FY25 were marginally higher, led by seasonally high agri slippages, the management indicated that ex-agri slippages have remained flat Q-o-Q. The management also emphasised that asset quality metrics across segments remain best-in-class, and the bank is confident that these trends are sustaining, the brokerage firm added.