Fundamental Analysis Report – Nifty Bank Index

Index Overview

The Nifty Bank Index tracks India’s leading public and private sector banks. Key drivers include RBI policy (rates, liquidity, CRR/SLR), credit growth, Net Interest Margins (NIMs), deposit repricing and CASA share, treasury gains/losses (govt. bond yields), asset quality cycles (GNPA/NNPA, provisioning/credit costs), and government policy (divestment/recapitalisation).

Institutional Holdings & Fund Activity

FIIs: Rotate tactically with the rate cycle and sovereign yield moves; preference for scale franchises with strong liability profiles.
DIIs: Persistent allocations via banking/financials funds; buy-the-dip in high-quality names.
Impact: Liquidity supportive but sensitive to RBI guidance and bond-yield direction.

Financial Health Snapshot (Sector Averages)

Capital: CET1 ratios comfortable for large banks; mid/small banks improving via retained earnings.
Profitability: NIMs normalising from peaks; fee income steady; treasury line volatile with yields.
Asset Quality: GNPA/NNPA trending lower; slippages manageable; credit costs moderating.
Liquidity: CASA mix under watch as deposit competition persists; LCR remains comfortable.

Valuation Check

Current Valuation: Large private banks trade at premium P/BV; PSU leaders at discounts vs. long-term averages but improving. Tone: Neutral-to-Positive for quality banks; watch for deposit-cost pressures and rate-cycle turns.
Drivers: RBI policy path, bond yields, credit growth prints, and government policy actions.

Top & Bottom Performers in Nifty Bank Index (Illustrative Financials)

Note: Banks do not report EBITDA. Below, Operating Profit (PPOP) is used as a practical proxy for ‘EBITDA’. Figures are structured placeholders—replace with the latest reported numbers before publication.

Bank	Total Income (₹ Cr)	Net Profit (₹ Cr)	Gross ‘EBITDA’ (PPOP) (₹ Cr)	Net ‘EBITDA’ (PPOP after adj.) (₹ Cr)	Operating Expenses (₹ Cr)	Performance Rank
HDFC Bank	220,000	46,500	74,000	70,500	98,000	Top Performer 1
ICICI Bank	160,000	38,000	58,000	55,500	68,500	Top Performer 2
State Bank of India	410,000	61,000	98,000	94,000	195,000	Top Performer 3
Axis Bank	145,000	26,000	47,000	44,500	61,000	Top Performer 4
Kotak Mahindra Bank	90,000	16,500	28,000	26,800	35,500	Top Performer 5
Punjab National Bank	110,000	13,200	24,000	23,000	50,000	Bottom Perf. 1
Bank of Baroda	115,000	15,800	26,000	24,800	52,500	Bottom Perf. 2
IndusInd Bank	80,000	12,800	24,500	23,300	30,200	Bottom Perf. 3
IDFC First Bank	55,000	3,800	13,500	12,800	23,500	Bottom Perf. 4
AU Small Finance Bank	30,000	2,900	8,200	7,800	12,600	Bottom Perf. 5

Market Timing Insight – Nifty MidSmall Healthcare Index

Put–Call Ratio (PCR) readings are elevated, signalling short-term froth/overbought conditions. Prefer staggered entries on pullbacks instead of lump-sum buys.
Short-term: Avoid chasing breakouts; wait for mean reversion.
Medium-term: Use 5–8% dips to build positions in profitable, low-debt names.
Long-term: Structural demand intact (domestic formulations, exports, hospitals/diagnostics); deploy on broader market corrections.

Investment Strategies

Short-Term (1–3 months): Trade large banks around RBI MPC outcomes, quarterly results, and bond-yield moves. Prefer liquid leaders; keep tight risk controls as multiples are sensitive to guidance and yields.

Mid-Term (6–12 months): Accumulate top-tier banks on corrections if NIMs hold and credit costs remain benign. Monitor CASA trends and deposit repricing. Add MidSmall Healthcare after PCR cools and valuations normalise.

Long-Term (3–5 years): Core allocation to scale franchises with strong liabilities, diversified fee engines, and superior underwriting. Track asset quality through cycles, digital execution, and regulatory changes.

Key Technical Levels – Nifty Bank Index

Time Frame	Critical Support Levels	Critical Resistance Levels
Short-Term (1–3 M)	48,500 / 47,800	50,800 / 51,600
Mid-Term (6–12 M)	46,500 / 45,000	53,500 / 55,000
Long-Term (3–5 Y)	42,000 / 39,000	58,000 / 61,000

Upcoming Important Events (Next 3 Months – Banks)

• Sep 29 – Oct 1, 2025: RBI MPC policy meeting (rates, stance, liquidity).
• Mid-October 2025: RBI MPC Minutes (≈14 days post-policy).
• Oct–Nov 2025: Q2 FY26 earnings season for banks (NIM trajectory, slippages, credit costs, deposit growth).
• Monthly (end): RBI Weekly Statistical Supplement (WSS) – system credit/deposit growth, liquidity trends.

Monthly: G-Sec auction calendar & yields affecting treasury line and MTM gains/losses.

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