Nifty Bank extends losses to 6th day in a row — its longest losing streak in over 10 months

The Nifty Bank continued to fall for the sixth session in a row on Thursday — its longest losing streak since September 29, 2022 — as banking stocks remained a mixed bag after Fitch said Indian lenders' operating environment has grown stronger with the easing of the risks associated with the COVID pandemic, but also flagged certain structural issues in the sector, such as lengthy legal processes. The banking index — whose 12 constituents include SBI, HDFC Bank, Bank of Baroda, Punjab National Bank, ICICI Bank and Axis Bank — took its losses to 1,073.1 points, or 2.4 per cent, in the six-day period.

In its last losing streak, the Nifty Bank had shed 3,820.6 points, or 9.2 per cent, in seven consecutive trading sessions.   

Seven out of the 12 Nifty Bank stocks managed to finish higher on Thursday, with PNB rising 2.5 per cent, Bank of Baroda 1.9 per cent, SBI 1.1 per cent and Axis Bank 0.5 per cent. On the other hand, Kotak Mahindra Bank was the worst hit in the 12-scrip basket, ending 1.1 per cent lower. HDFC Bank and ICICI Bank declined 0.7 per cent each.

In pre-market hours on Thursday, Zee Business Managing Editor Anil Singhvi pointed out that it would be important for the Nifty Bank to close in the green, as he expected closing levels above 19,650 and 44,600 to be a sign of the end of weakness on Dalal Street respectively. He also expected support for the banking gauge at 43,600-43,775 levels for the day and the next big base at 43,000 — which would be honoured during the course of the day. 

What Fitch makes of the Indian banking space

Fitch said that while the number of prudential indicators for the country's banking space has improved compared with pre-pandemic levels, growing risk appetite in a relatively benign operating environment highlights the importance of appropriate buffers against potential stress. It also highlighted that the bad bank, incorporated in July 2021, has not yet played a meaningful role. 

According to the agency, the COVID-associated risks have receded after the pandemic hurt the economy. It, however, added that the large size of the country's economy and favourable demographics should offer banks opportunities to generate profitable businesses, and diversify risk and revenue.

In March 2020, Fitch had lowered the operating environment mid-point score of Indian banks to 'BB' from 'BB+'.

Currently, the rating agency has a rating of 'BBB-' on India with a 'stable' outlook. It estimates average GDP growth in the economy at 6.4 per cent from the financial year 2023 to the financial year 2025. Read more on how Fitch views the Indian banking space

Catch latest stock market updates here. For all other news related to business, politics, tech, sports and auto, visit Zeebiz.com.