Nifty Bank today: Banking and financial stocks witnessed strong buying interest after the Reserve Bank of India (RBI) introduced a concessional swap facility for overseas borrowings with a minimum maturity of three years. The move follows RBI Governor Sanjay Malhotra’s June 5 announcement easing norms for overseas borrowings by state-run enterprises and is expected to lower hedging costs, making foreign-currency borrowing more attractive for lenders.
The development boosted sentiment across banking and financial counters, helping sectoral indices outperform the broader market.
Bank Stocks Lead Gains
The Bank Nifty index rose 1.3% to touch an intraday high of 54,799.95. Despite Tuesday’s gains, the index remains down 2.5% over the past three months and 8% over the last six months.
Almost all banking stocks traded higher, barring HDFC Bank. IDFC First Bank emerged as the top gainer, climbing more than 3.5%. Federal Bank, Bank of Baroda, ICICI Bank, Punjab National Bank, AU Small Finance Bank, Canara Bank and IndusInd Bank advanced between 1% and 2.5%. Large-cap lenders including Kotak Mahindra Bank, Axis Bank and State Bank of India also traded in positive territory.
The Nifty Financial Services Index also gained 1.3% to hit an intraday high of 25,117.75.
Within the index, MCX and ICICI Lombard led the gains with advances of around 3% each. PFC, Bajaj Finance, Cholamandalam Investment and Finance, LIC Housing Finance, REC, Bajaj Finserv and ICICI Prudential Life Insurance rose more than 1% each. HDFC Life and Muthoot Finance were the only major laggards.
RBI Swap Facility Highlights
The RBI’s newly announced swap facility will remain available through September 30 and is designed to compensate banks for hedging costs on three- to five-year Foreign Currency Non-Resident (FCNR) deposits. The central bank has also enabled banks to offer leverage to clients for such deposits.
The facility will be available for External Commercial Borrowings (ECBs) with an average maturity of three years or more raised by public sector undertakings, as well as Overseas Foreign Currency Borrowings (OFCBs) with a minimum maturity of three years raised by Authorised Dealer Category-I banks.
According to the RBI circular, the facility applies to drawdowns made up to December 31, 2026, and will remain open until January 15, 2027.
Under the arrangement, banks can sell dollars to the RBI at the FBIL Reference Rate and buy them back at the end of the swap period in multiples of $1 million. The swap carries a fixed rate of 1.5% per annum, compounded semi-annually, with a maximum tenor of five years.
Borrowings with embedded options and ECBs raised for refinancing existing debt are excluded from the facility.
The RBI also clarified that existing restrictions on banks issuing non-fund-based facilities assuring redemption or repayment of funds will not apply to these deposits. The underlying deposits will have a one-year lock-in period, while swap transactions with the RBI cannot be cancelled.
Banks will also be allowed to exclude swap positions arising from FCNR deposits and ECBs while computing their net open rupee position.
The move is expected to reduce the cost of overseas fundraising for lenders and improve the attractiveness of foreign-currency deposits, thereby supporting liquidity and sentiment across the banking sector.
Technical Outlook Remains Cautious
Despite the rally, technical analysts continue to advise caution as Bank Nifty remains within a broad trading range.
A note from PL stated that on the upside, the index would need to move above the 50 EMA level near the 62,000 zone to improve the overall bias. On the downside, the 59,800 zone remains a crucial support level. The brokerage expects Bank Nifty to trade within a range of 53,000-55,000 levels.
“Going ahead, the immediate support for Bank Nifty is placed in the 53,600-53,500 zone. Any sustainable move below this zone could result in Bank Nifty extending its weakness towards 53,100, followed by 52,700 in the short term. On the upside, the immediate resistance for Bank Nifty is placed in the 54,500-54,600 zone,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.
Om Mehra, Technical Research Analyst at SAMCO Securities, noted that Bank Nifty has slipped back below its 20-day simple moving average positioned near 54,070, erasing the brief close above it witnessed during the previous two sessions.
“The Bollinger Bands are visibly contracting, a pattern that typically precedes a sharp directional move in the coming sessions. The RSI is placed at 47, reflecting a lack of clear direction, while the MACD remains flat. The immediate resistance is placed at 54,500, followed by 54,900. On the downside, 53,700 and 53,500 remain key support levels,” said Mehra.
According to him, a breach of the support zone would confirm a bearish outlook and could trigger a sharper decline. Until a decisive breakout emerges from the current Bollinger Band contraction, the Bank Nifty index is likely to remain volatile.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
