The Nifty Bank index has been underperforming the Indian stock market benchmark, the Nifty 50, for the past five sessions. On Tuesday, May 6, the Nifty Bank index fell by nearly 1 per cent in intraday trade, while the Nifty 50 declined by about 0.40 per cent. Last week, the equity benchmark gained 1.28 per cent, whereas the Nifty Bank underperformed with a gain of just 0.83 per cent.
The Bank Nifty has declined in seven of the last nine sessions. After posting strong gains of 7 per cent each in March and April, the index has fallen over 1 per cent so far in May due to profit booking.
Why is Bank Nifty underperforming?
The recent underperformance of the banking stocks could be attributed to the unimpressive earnings of some of the banking majors, such as SBI, Kotak Mahindra Bank and IndusInd Bank.
After better-than-expected earnings from HDFC Bank, ICICI Bank, and Axis Bank, expectations rose for a strong overall performance from the banking sector. However, the Q4 results of other major banks were mixed, triggering profit booking in the sector.
The primary reason behind Bank Nifty’s recent underperformance is the mixed set of quarterly earnings reported by India’s top banks. While HDFC Bank, ICICI Bank, and Axis Bank posted relatively strong Q4 results, others like SBI, Kotak Mahindra Bank, and IndusInd Bank delivered more muted performances. This has led to profit booking in the banking sector,” said Prashanth Tapse, senior VP of research at Mehta Equities.
(This is a developing story. Please check back for fresh updates.)
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