IndusInd Bank, YES Bank, Federal Bank, AU SFB shares lead Nifty Bank losers; what's ahead?

A couple of private lenders such as IndusInd Bank Ltd, YES Bank Ltd, Federal Bank Ltd and AU Small Finance Bank Ltd led Nifty Bank losers amid a broad-based selloff on Tuesday. IndusInd Bank plunged 4.7 per cent to Rs close at Rs 905.15. YES Bank declined 4.61 per cent to Rs 21.71. Federal Bank slipped 2.38 per cent to Rs 273.05. Canara Bank, AU SFB, Bank of Baroda and Punjab National Bank fell up to 2.09 per cent. Axis Bank, Union Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank declined up to 1.93 per cent. HDFC Bank bucked the weak trend, rising up to 0.28 per cent.

Vatsal Bhuva, Technical Analyst at LKP Securities said Bank Nifty witnessed a weak closing, forming a bearish candlestick on the daily chart, indicating rising selling pressure. The index closed below its 20-day SMA for the first time since the last few sessions and is now hovering near its 50-day SMA, reflecting short-term weakness.

"Momentum indicators also signal caution, as RSI is downward sloping, forming a lower top with a bearish crossover, suggesting a shift in sentiment. Immediate support is placed at 59,000, while resistance stands at 59,800. A bullish view should be considered only on a sustained close above 60,000; until then, a cautious approach is advised," he said.

The fall in banking shares was seen amid a broad-based selling in the market, as geopolitical tensions pushed safe-havens gold and silver to record highs. December quarter earnings have nothing to write home about. 
Nomura in its reports on banks said soft top line drove miss in core profitability for ICICI Bank. It called HDFC Bank's Q3 results in-line, saying deposit traction remains key. On Federal Bank, ICICI Securities said Q3 was a healthy quarter with growth revival and NIM uptick, which is partially reflective in the stock's valuations. Other income drove PNB's Q3 earnings, MOFSL said. It said asset quality was robust but noted NIM guidance was reduced.

"An area of concern is that early Q3 results do not indicate a recovery in earnings growth. This is likely to change when the results of auto companies start flowing in since this sector has done well in Q3 and it is heartening that the growth momentum is continuing in the sector," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments

Vijayakumar said geopolitical and geo-economic issues will continue to dominate in the near-term and will influence the direction of the market. Investors can watch the developments and continue to follow a policy of nibbling at high quality stocks on declines, he said.