Bank Nifty Poised to Lead Rally into July

Overall Indian markets, Nifty have remained flat week on week barring Wednesday’s uptick which resulted in Nifty making new highs, says Jaykrishna Gandhi, Head -- Business Development, Institutional Equities, Emkay Global Financial Services.

Bank Nifty has under-performed during this period and is poised to lead the rally into July on back of the HDFC merger, he said.

The US markets continued the positive data with consumer confidence climbing to highest levels since January 2022, new home sales jumped 12.2 per cent to highest levels since February 2022, and lastly home prices were up 0.9 per cent in April for the top 20 cities in US.

Trideep Bhattacharya, CIO-Equities, Edelweiss MF, said the Nifty all-time high reflects the confluence of two factors, namely, the relative earnings resilience of India Inc. based on strong bottom-up drivers in a difficult global macro environment and post late start, the encouraging recent progress of monsoons across India.

Siddhartha Khemka, Head of Retail Research, Broking and Distribution, MOFSL, said after making several attempts in the past few days, Nifty finally managed to cross its previous highs.

Strong institutional flows, healthy macros and robust earnings growth drove domestic market towards its new highs. Even the current valuations are reasonable at 19x one-year forward PE which at previous peak had touched a high of 24x.

With monsoon kicking in and RBI taken a rate pause, the strong momentum in earnings is likely to continue. Thus at current valuations, market is expected to continue its upmove and remain buoyant, he said.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. said HDFC Bank has been underperforming the Nifty for the last 3 years in spite of its decent growth. This underperformance is likely to change post merger.

The bank which has an enviable track record and excellent execution capabilities will gain from the synergy unleashed by the merger.

Institutional selling to comply with the 10% holding ceiling has been weighing on the stock. This will be over once the merger is affected. The prospects of the merged entity look very bright and this will attract more institutional investment from sector specific funds and ETFs which are not bound by the 10 per cent ceiling, he added.