SBI, IndusInd Bank, Yes Bank, and other stocks tumble up to 4%, Nifty Bank drops 900 points. What lies ahead?

The Nifty Bank index shed nearly 900 points on Monday as weak earnings by heavyweight State Bank of India (SBI), along with the overall market weakness, dampened investor sentiment.

The Nifty Bank index declined nearly 2% to hover around 54,442, as seen at 10.50 am on Monday. SBI shares were the top losers on the index, declining around 4% today and extending losses to 10% over two days after reporting margin pressure and weaker operating performance in its March quarter earnings.

India’s largest PSU lender saw its net interest margins contract, despite a rise in net profit and net interest income. International brokerages, including Bernstein and Citi, still remain bullish on the stock with ‘Outperform’ and ‘Buy’ ratings.

IndusInd Bank shares, meanwhile, dropped over 3%. Shares of the private lender have gained 11% in one month and 13% in one year, but dropped more than 22% in three years.

AU Small Finance Bank and IDFC First Bank shares dropped around 3% while Punjab National Bank (PNB) shares declined 2%. Heavyweight HDFC Bank and Kotak Mahindra Bank shares dropped 1.5% each, while Union Bank, Federal Bank and Yes Bank shares dropped around 1% each.

Notably, the RBI on Friday said that it has imposed a penalty of Rs 31.80 lakh on Yes Bank for non-compliance with certain provisions on 'Know Your Customer'. The central bank said that the bank failed to put in place a system of using a KYC Identifier assigned by the Central KYC Records Registry for the purpose of establishing an account-based relationship with customers.

Canara Bank, Axis Bank and ICICI Bank shares were down up to 1%. Bucking the trend, Bank of Baroda shares were trading in the green with marginal gains after its Q4 results.

What lies ahead?

Bajaj Broking, in its report, had highlighted that the Nifty Bank index is continuing to trade in a triangular consolidation in the range of 54,000 - 56,500 in the last 3 weeks. “We expect the index to extend the same in the coming sessions,” it said.

“Bank Nifty’s last two weeks' highs are almost identical around 56,475, which also coincides with the upper band of the triangular consolidation. Going ahead, a move above the same will infuse further momentum towards the 57,500 levels in the coming weeks. Failure to move above 56,475 will signal extension of the last 3 weeks' consolidation in the range of 54,000 - 54,650,” the domestic brokerage said.

On the downside, it saw the banking index finding its first support at 54,680 and then at 54,300. Notably, the index has already breached the first support level suggested by the brokerage. On the upside, it sees the index finding resistance at 55,500 and then at 55,770.

Rajesh Bhosale, Technical Analyst at Angel One, meanwhile, saw Nifty Bank finding support at 54,800 and then at 54,500 on the downside, and resistance at 55,800 and 56,300 on the upside. The index has breached both the support levels suggested by the analyst.

Also read: Why are markets falling today?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)