Bank Stocks Climb Up to 9% in Weak Mkt; Banks Could Provide Cushion, Says Analyst

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Bank Stocks Climb Up to 9% in Weak Mkt; Banks Could Provide Cushion, Says Analyst
Credit: © Reuters.

By Malvika Gurung

Investing.com -- Investors on Dalal Street lost over Rs 4 lakh crore wealth by 11 am on Thursday, amid the Fed’s policy update, rising political tension between Russia and Ukraine, a record high DOLLAR/USD rate and oil prices, ahead of F&O expiry today, in the pre-Budget week.

In the afternoon session, Nifty 50 and BSE Sensex had recouped major losses and were trading 0,76% and 0.79% respectively at 2:35 pm, while sectoral index Nifty Bank was up 0.55%, with only three stocks out of 12 trading in the red.

While the market is pegged to witness volatility in the upcoming months too, analysts estimate bank stocks to provide some cushion to the walloping market.

The valuations of banking stocks do not appear stretched and provided the Govt extends the capex push in the Budget, bank stocks could provide a good boost to the volatile market going forward, stated Pankaj Pandey, an analyst at ICICIDirect.com, in an interview with ET.

As per the financials reported by key banking players like Bajaj Finance (NS: BJFN ) and AXIS Bank (NS: AXBK ), the retail and rural segment indicate strong performances, and if inflation rises, there could be a possible increment in credit growth.

However, due to volatility in the broader market, RBI would be forced to hike interest rates, which would hurt new-age companies. 

At 2:45 pm, Union Bank of India (NS: UNBK ) was up 9.15%, RBL Bank (NS: RATB ) surged 6.15%, and Canara Bank (NS: CNBK ) jumped 8.7%.

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