Correction in Crude oil prices aid Indian equities; Nifty Bank up over 4, Axis Bank, IndusInd Bank gain most

Banking stocks surged up to 7 per cent on the NSE in the intraday trade on Thursday. Around 12 pm today the 12-share Nifty Bank index was up nearly 4 per cent and aiding the overall market. The private banks such as Axis Bank and IndusInd Bank were among the biggest gainers and were up by over 6 and 5.5 per cent respectively on the NSE.

The rising crude oil price could create inflationary pressures and disturb the fiscal math of the country, however, the normalization of crude oil price, gives hope to the rate sensitives sector, mainly the banking segment, the experts believe.

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“Short squeeze in an oversold market can cause sudden reversal in market trends seen Wednesday. High quality financials present good buying opportunities now. The down risk is limited,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Asian shares surged on Thursday, tracking Wall Street`s gains as planned diplomatic talks between Russia and Ukraine buoyed sentiment, although analysts warned the rally could be susceptible to a sharp reversal as risks remain, Reuters reported.

Oil prices also regained some footing, having fallen more than 12% on the previous session as United Arab Emirates pledged to support hiking oil output to ease mayhem in energy markets, it further said.

Indian equities took cues from the Asian peers and the vigour was visible in the banking stocks as well. The Brent Crude was trading nearly 1 per cent higher to US $110 per barrel, as per the investing.com at around 11:50 am.

Domestic brokerage firm Axis Securities views Axis Bank to be the front-runner to acquire Citi Bank’s retail asset, including credit cards and would help the bank improve its market share.

Index heavyweights such as ICICI Bank and HDFC Bank gained almost 5 and 3.5 per cent, while India’s largest lender State Bank of India surged over 4.5 per cent on the NSE intraday.

However, Axis Securities does not see any adverse impact on the performance of market leaders that is SBI Cards, ICICI Bank, and HDFC Bank as they will continue to garner market share over the medium term backed by improved growth.

Indian banking industry’s total payments volume including, digital and paper-based instruments grew by 1 per cent month-on-month (MoM) and 62 per cent Year-on-Year (YoY). Retail payments volume grew by 62.3 per cent YoY, Systematix Institutional Equities said.

Retail payments and retail digital payments, excluding paper-based instruments grew by 22.8 per cent YoY and 26.5 per cent YoY respectively, in value terms, the brokerage firm said.

In the broader markets, the banking shares such as Bandhan Bank, Federal Bank, RBL Bank, AU Small Finance Bank, IDFC First Bank and PNB each gained between 2.5-5 per cent on the NSE intraday.