The $21 billion stock of Indian banks may no longer be declining
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| The $21 billion stock of Indian banks may no longer be declining |
A measure of the top 12 largest banks in the nation had its worst week since January, with a loss of about $21 billion in market value. HDFC Bank was responsible for two thirds of that enormous loss; the bank's quarterly reports indicated a drop in net interest margins and sluggish deposit growth.
Following an unusual selloff in HDFC Bank Ltd., the biggest private sector lender in the nation, the prognosis for India's $433 billion banking industry has deteriorated significantly.
A measure of the top 12 largest banks in the nation had its worst week since January, with a loss of about $21 billion in market value. HDFC Bank was responsible for two thirds of that enormous loss; the bank's quarterly reports indicated a drop in net interest margin and sluggish deposit growth.
In US dollars, Indian lenders began 2024 with their highest yearly profit in four years. In an unofficial study conducted by Bloomberg last month among market participants, the sector was mentioned as the best investment alongside tech equities. Concerns have now been raised about HDFC Bank's results due to reports from competitors ICICI Bank Ltd., Kotak Mahindra Bank Ltd., and Axis Bank Ltd.
"The era in which banks were trading at a premium to book is no longer applicable," said Sheshadri Sen, strategist at Emkay Global Financial Services Ltd. That will depress stocks relative to prior years.
According to a report published on Thursday by Goldman Sachs Group Inc. analyst Rahul Jain, private sector banks as well as non-bank lenders "may face further challenges" if they chase market share in loans at the price of margins. due to a lack of available money.
On January 20, ICICI Bank and Kotak Mahindra will release their quarterly results; on January 23, Axis Bank will make an announcement.
The deteriorating outlook for the industry is detrimental to the larger market. More than 25% of India's benchmark NSE Nifty 50 index is comprised of the top five private lenders in the nation, and banks made up 15% of the index's earnings last year, according to Bloomberg statistics.
