On April 17, 2025, Indian benchmark indices experienced a notable rebound, largely driven by robust buying activity in financial heavyweights and Reliance Industries. This surge was particularly evident in the Nifty Bank index, which hit a four-month high, buoyed by significant gains from major players like HDFC Bank and ICICI Bank.
During the trading session, four stocks within the Nifty50 reached fresh 52-week highs, indicating a healthy investor sentiment in the banking sector. Bharti Airtel's stock climbed to ₹1,877, marking an 18% rise year-to-date (YTD). ICICI Bank followed closely, reaching a new high of ₹1,392, reflecting an 8% YTD increase. HDFC Bank also made headlines, hitting ₹1,899.7, up 6% YTD. Eicher Motors rounded out the list with a new high of ₹5,668.5, enjoying a 16% YTD rise.
The Nifty Bank index surged for the fourth consecutive session, gaining a remarkable 4,167 points, or 8.29%, in the last four trading days. On April 17, it advanced 2.43%, or 1,289 points, reaching a seven-month high of 54,407.20. This impressive performance brought the index within striking distance of its record high of 54,467.35, achieved on September 26, 2024.
As of 2:06 PM on April 17, the Nifty Bank index was trading 2.31% higher at 54,344.55, significantly outperforming the broader Nifty50 index, which was up 1.76%. Analysts pointed to the strong buying interest in banking shares, especially ahead of the earnings announcements from HDFC Bank and ICICI Bank scheduled for Saturday, April 19, 2025.
ICICI Bank's stock notably surged nearly 4% during the session, reaching a fresh 52-week high of ₹1,408.80. Market analysts are optimistic about the bank's upcoming earnings, with expectations of double-digit growth in net profit driven by strong net interest income and stable margins. Other banks, including State Bank of India, Axis Bank, and Kotak Mahindra Bank, also saw their shares rise between 1.3% and 3.3%.
The bullish sentiment in the banking sector can be attributed to several factors, including the recent repo rate cut announced by the Reserve Bank of India (RBI), which is expected to lower borrowing costs. Analysts from Goldman Sachs noted early signs of improvement in asset quality and operating profitability within the banking sector, further fueling investor confidence.
Despite this positive outlook, some analysts caution that the data points could remain soft in the near term due to sluggish credit growth and elevated credit costs. Goldman Sachs anticipates that slippages in asset quality may begin to moderate by the second half of FY26, leading to a decrease in credit costs.
Heading into the earnings season, analysts have mixed expectations for HDFC Bank and ICICI Bank. HDFC Bank is projected to report a modest 3.2% year-on-year increase in net profit for Q4FY25, with net interest income expected to grow by 5.5%. However, margins may face pressure. Deposit growth is estimated at 14.6%, while loan growth is pegged at 3.8%. Analysts at Motilal Oswal Financial Services (MOFSL) expect stable cost ratios and improvements in return ratios, projecting return on assets (RoA) at 1.8% and return on equity (RoE) at 14.1% by FY27.
In contrast, ICICI Bank is expected to deliver a stronger performance, with a projected 12.3% year-on-year profit growth and a 9.2% increase in net interest income. The bank's clean loan book and high credit quality are seen as key advantages. Analysts anticipate that ICICI Bank will achieve RoA and RoE of 2.2% and 17%, respectively, by FY27. Given these metrics, ICICI Bank is viewed as a more attractive investment option in the near term.
Both banks have received 'Buy' ratings from MOFSL, with price targets set at ₹2,100 for HDFC Bank and ₹1,600 for ICICI Bank. As the earnings announcements approach, investors are keenly watching the performance of these banking giants. HDFC Bank shares closed 1.53% higher at ₹1,906.55, while ICICI Bank shares settled 3.68% higher at ₹1,406.65 on the Bombay Stock Exchange (BSE).
With the stock market holiday on April 18, 2025, Thursday marked the last trading day before the earnings release, adding to the urgency among investors to make their moves. The upcoming results will be crucial in determining the future trajectory of these stocks and the overall banking sector.
In summary, the recent performance of HDFC Bank and ICICI Bank reflects a broader confidence in the banking sector, driven by strong fundamentals and positive market conditions. As investors prepare for the upcoming earnings, the focus will remain on the banks' ability to navigate the challenges and capitalize on the opportunities presented in the current economic landscape.
