Axis Bank down 5% as management sees NIM pressure in Q3 as well; Bank Nifty falls 0.7% to trade near 59k

Axis Bank shares fall 4%, drag down Nifty Bank

The shares of Axis Bank declined more than 5 percent on December 16, after Citi Research in its latest report noted that the lender's management sees net interest margin recovery likely to be delayed to Q4FY26 or Q1FY27, instead of the ongoing Q3FY26.

The shares of the private bank closed at Rs 1,219 apiece, dragging down the Nifty Bank index on Tuesday.

Here's what Citi said about Axis Bank:

Citi Research maintained its 'Neutral' call for the shares of Axis Bank, with a target price of Rs 1,285 apiece. This implies only a marginal upside potential from the stock's previous closing price of Rs 1,284.8 apiece.

The brokerage said that the management sees corporate lending showing improved traction, while retail segment is recovering being fueled by pent-up demand, although its sustainability needs monitoring. It added that card stress is easing, personal loans are stabilizing and export-oriented MSMEs show no signs of stress.

However, gross slippages will likely see seasonal volatility in Q3 from agricultural segment's CC/OD facilities, although it will be less severe than Q1, it said.

Citi added that Axis Bank now expects NIMs to bottom out in either Q4 FY26 (January-March, 2026) or Q1 FY27 (April-June, 2026), instead of the ongoing Q3 FY26 (October-December, 2025). "Management now forecasts a shallow, 'C'-shaped NIM trajectory towards a targeted 3.8% over the next 15-18 months," it said.

The international brokerage added that Axis Bank's optimization of the fee-to-asset ratio is presently constrained.

Other top losers on Bank Nifty:

The downturn in the shares of heavyweight Axis Bank dragged down Nifty Bank index 0.72 percent to 59,034.60. Bank of Baroda, Canara Bank, Punjab National Bank (PNB) and IDFC First Bank shares followed, dropping nearly 1 percent each.

AU Small Finance Bank, IndusInd Bank, Federal Bank, State Bank of India (SBI) and HDFC Bank shares also closed in the red.

Technical view on Bank Nifty:

Amruta Shinde, Technical & Derivative analyst at Choice Broking, sees immediate resistance at around 59,200 for the banking index, and a sustained breakout above this level could lead to an upside move toward 59,700–59,800. The 59,200–59,300 zone remains a crucial support area, she said.

“From a technical perspective, the index remains in a consolidation phase, with a broader trading range defined between 59,750 on the upside and 58,700 on the downside. However, the prevailing lower-high structure keeps 59,700 as a crucial level for any meaningful shift in trend. Momentum indicators mirror this indecisive setup, with the RSI hovering below the 60 mark, reflecting the absence of a clear directional bias. A decisive breakout above the immediate resistance would be necessary to reignite bullish momentum in the index,” said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

Angel One meanwhile remained bullish on Bank Nifty’s outlook, with support levels at 59,000-58,800, and resistance at 59,800-60,000.

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