Citi sees Indian banks to report modest Q3 profit growth; check key levels for Bank Nifty

Citi sees Indian banks to report modest Q3 profit growth; check key levels for Bank Nifty

• Indian banks expected to see 5 percent YoY net interest income growth in Q3
• Citi issues 90-day positive watch on HDFC Bank and Kotak Mahindra Bank.
• Bank Nifty flat; Axis Securities notes consolidation, key support at 58,700

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Citi in its latest note has said that Indian banks are expected to report 5 percent year-on-year growth in net interest income and 4 percent upside in profit after tax in the December quarter.

It added that credit growth is likely to slow to 3–5 percent sequentially (QoQ), while net interest margins (NIMs) show divergent trends. Citi expects margins to expand for AU Small Finance Bank, HDFC Bank, Kotak Mahindra Bank, RBL Bank and SBM Bank.

However it sees margins to remain flat for ICICI Bank and IDFC First Bank, and dip slightly for Axis Bank and Yes Bank. Citi placed a 90-day positive catalyst watch on HDFC Bank and Kotak Mahindra Bank, while downgrading Federal Bank to "neutral" after a sharp rally.

Technical view on Bank Nifty:

Axis Securities remained mildly bullish on Bank Nifty, stating that the trend-deciding level for the day is 59,306. In case the index manages to trade above this level, it can rally up to 59,396-59,492-59,581 levels, the domestic brokerage said.

“However, if it trades below 59306 levels, we may witness profit booking in the market, and the index may correct up to 59210-59121-59024 levels,” it added.

“The index overall is having a consolidation period with the support maintained strong near the 58700 zone and on the upside a decisive breach above the 59800 level is necessary to establish conviction and trigger for fresh upward move in the coming days having targets of 61300 and 62700 levels expected,” said PL Capital.

Bank Nifty today:

Bank Nifty was trading almost flat in the green in the afternoon. The index rose 0.03 percent to 59,318.25, as seen at 12.50 pm. Axis Bank, Kotak Mahindra Bank, Punjab National Bank (PNB), HDFC Bank and State Bank of India (SBI) shares were trading in the green with marginal gains.

Canara Bank, AU Small Finance Bank, ICICI Bank, IndusInd Bank, IDFC First Bank, Bank of Baroda and Federal Bank meanwhile were trading in the red with marginal losses.

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