The Nifty Bank index declined more than 3% to hit an intraday low of 53,437 in the morning before recovering some losses. At 10:30 am, the index was down 2.8% at 53,774, as HDFC Bank shares recovered slightly to trade nearly 5% lower.
Shares of IDFC First Bank, AU Small Finance Bank, and Axis Bank declined around 3%, while IndusInd Bank, Kotak Mahindra Bank, Bank of Baroda, Punjab National Bank (PNB), Union Bank of India, Federal Bank, Yes Bank, ICICI Bank, Canara Bank, and State Bank of India (SBI) fell around 2% each.
The index has erased all the gains recorded during the three-day rally earlier this week in just one session so far.
Nifty Bank breaches support levels
Bajaj Broking had said that a breach below Wednesday’s low of 54,689 will signal a pause in the pullback, leading to some consolidation in the range of 53,300-55,600 in the coming sessions. The index today has already breached the support level and is heading towards the lower end of the range suggested by the domestic brokerage. “Volatility is expected to remain elevated in the near term, driven by uncertain global cues and rising geopolitical tensions, which continue to weigh on overall market sentiment,” it said.
Vatsal Bhuva, Technical Analyst at LKP Securities, had placed the immediate support at 54,600, which the index has comfortably breached. The analyst saw resistance near 55,900.
Notably, apart from HDFC Bank’s sharp decline, the Federal Reserve’s hawkish commentary and decision to keep rates unchanged also remain a key factor. US Federal Reserve Chair Jerome Powell on Wednesday announced the American central bank’s decision to keep policy rates unchanged, as inflation is not coming down as much as they had hoped amid rising geopolitical tensions in the Middle East and President Donald Trump’s tariff flip-flops. Investors now increasingly eye RBI’s upcoming meeting in April, which can bear a strong impact on Indian lenders.
Motilal Oswal Financial Services said that its Q4 FY26 channel check paints a nuanced picture of a credit cycle, transitioning from a phase of stress normalization, mainly in unsecured segments, to a selective, execution-led recovery. “Geopolitical disturbances add a tail risk layer to export-linked credits in Gujarat and Maharashtra over the next quarter and have to be monitored. We continue to favor lenders with strong execution, liability franchise depth, and disciplined underwriting,” it said.
“ICICI Bank and HDFC Bank remain our top private sector picks, offering compounding growth with robust asset quality. SBI is our preferred PSU pick for its all-round execution and healthy growth trajectory. AUBANK remains well-positioned as it approaches the Universal Bank transition with an outlook to deliver industry-leading growth along with improved profitability,” it added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)