Chennai: With growth in bank credit and lending rates going up faster than the interest on deposits, bank stocks performed well at the NSE with Nifty Bank touching a high of 44,151.80 points on Wednesday.
The Nifty Bank index opened strongly at 44,078.60, touched a high of 44,151.80 and a low of 43,987.95, to close at 44,049.10 points.
“Financials continue to outperform on the back of strong credit growth, where non-food bank credit grew 18.3 per cent in October 2022 vs 6.9 per cent a year back, along with improving balance sheets, where most of the provisioning for bad assets is behind us with improving NIMs due to increasing interest rates where assets are getting re-priced faster than liabilities for banks,” said Nishit Master, Portfolio Manager, Axis Securities PMS.
“We expect this outperformance for banks and the tailwind for the sector to continue for 2023,” Master added.
According to him, in the short term, after Tuesday’s inflation print in the US, there is an expectation in some quarters that the US Fed might turn less hawkish in the upcoming policy, which will support the markets.
“Our base case for Fed Policy on 14th December is a 50bps hike. If the hike is lower than that, we expect the risk assets, including emerging markets like India, to outperform in the near term,” Master said.
Nifty rose for the second consecutive session, in line with most Asian markets that were up.
After a volatile session, Nifty closed 0.28 per cent, or 52.3 points higher, at 18,660.3, said Deepak Jasani, Head, Retail Research, HDFC Securities.
Sharp fall in WPI inflation for November also helped sentiments. Broad market indices rose more than the Nifty even as the advance decline ratio was up at 1.35:1, he said.
Jasani said that India’s wholesale inflation fell to a 21-month low of 5.85 per cent in November, a huge 470 basis points lower than what it was just two months ago.
WPI inflation stood at 8.39 per cent in October and 14.87 per cent in November 2021.