Banking stocks on a roll as exit polls predict sweeping win for BJP-led NDA govt

Several banking majors such as BoB, SBI, Axis Bank, ICICI Bank, Indian Bank, and Canara Bank also hit fresh 52-week highs on June 3

Banking stocks were on a roll on June 3 as Bank of Baroda, SBI, PNB, Axis Bank, ICICI Bank, Kotak Bank, among others soared up to 12 percent. Bank Nifty, too, crossed 50,000 for the first-time ever, thanks to optimism surrounding Street over comfortable victory for NDA in 2024 elections.

Several banking majors such as BoB, SBI, Axis Bank, ICICI Bank, Indian Bank, and Canara Bank also hit fresh 52-week highs on June 3. So far this year, these stocks have surged in the range of 10-46 percent, as against 5 percent climb in the Bank Nifty index.

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Analysts believe that the ruling government's reclaim to power in 2024 general election would imply policy continuity, sustained focus on capex, and fiscal consolidation. "We remain overweight on financials such as SBI, BoB, ICICI Bank, LIC Housing Finance, Shriram Finance, HDFC AMC, ICICI Prudential, ICICI Lombard," said Morgan Stanley.

Jefferies also remains positive on private financials such as HDFC Bank, IndusInd Bank, and Kotak Mahindra Bank, citing inexpensive valuations.

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Earlier, credit ratings agency S&P Global Ratings had revised its rating outlook on 6 Indian banks, including SBI and HDFC Bank to 'positive' from 'stable' amid good economic growth momentum. Other like Axis Bank, ICICI Bank, Kotak Mahindra Bank, and Indian Bank were also included.

From a technical perspective, Santosh Meena, head of research at Swastika Investmart said that the Bank Nifty's break above 50,000 could propel it towards 51,000 and 52,000 levels. However, on the downside, if it slips below 48,000-mark, the next support levels would be 47,000 and 46,200.

On an average, exit polls accorded 370 seats for NDA, with BJP set to win over 325 seats versus 303 seats in 2019. Street also anticipates BJP to inch closer to 40 percent vote share on its own compared to 37.3 percent in 2019, while NDA is expected to touch 47 percent vote share, as against 45 percent in 2019.

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