Bulls buy banks! ICICI Bank, SBI, Kotak Bank jump 5%, Bank Nifty inches closer to 52 week high

ICICI Bank and HDFC Bank will post their Q4 earnings report on April 19.

Banking stocks fired up in trade on April 17, emerging as the top performing sectoral gainer as blue-chip, index heavyweights such as ICICI Bank and HDFC Bank led the gains.

At 1.45 pm, the Bank Nifty index was higher by 2.3 percent at 54,300, with ICICI Bank, SBI and Kotak Mahindra Bank jumping up to five percent. The index was hovering 100 points lower than its 52-week high of 54,467.35. All the index constituents, barring IDFC First Bank, were trading in the green.

ICICI Bank and HDFC Bank are expected to post their earnings report for the quarter ended March FY2025 on April 19.

Commenting on the Bank Nifty’s outperformance compared to benchmark indices, Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that this move reflects investor response to India’s current macroeconomic environment.

Investors are piling into fairly valued large-cap banking stocks, looking for stability on the lenders' domestic-focused business amid global volatility given the tariff scenario. "Domestic consumption driven stocks in financials, telecom, aviation, cement and sections of autos are setting new records," noted VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

"This trend will continue. FIIs have turned buyers in India since the prospects of US and China are the worst in this crisis. FIIs are likely to continue buying high quality largecaps in domestic consumption sectors," he added.

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Further, banking stocks have been on a strong winning streak as private and public lenders trimmed their interest rate on fixed deposits and savings accounts, following the Reserve Bank of India's (RBI) Monetary Policy Committee's decision to trim the benchmark interest rate.

The RBI MPC decided to cut the repo rate by 25 basis points (bps) on April 9, marking the second consecutive rate cut, in roughly five years. The repo rate is the interest rate at which the central bank lends to commercial banks in India. This rate influences the interest rates on different types of loans offered to bank customers, thereby regulating cash flow in the market.

The reduction in rates will help banks ease margin pressure, which will make their profitability jump.

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