HDFC Bank, ICICI, Axis, Kotak Bank shares volatile as Q3 results reflect margin pressures; here’s why banks are falling

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Also Read: Pvt banks see muted Q3, challenges ahead The deposit growth has been lagging behind the credit growth which has increased the cost of funds for banks. Thus, Nair believes the earnings growth of banks will come down due to rising costs. A sharp sell-off was triggered in bank stocks with the Bank Nifty index falling more than 2% one week and over 5% in one month.

However, Nair believes the downside in the banking stocks is expected to be limited as valuations are not expensive, rather trading around long-term average. Bank Nifty has support near the 200 EMA, with the 44,560 level acting as an immediate support level. On the flip side, 46,000, followed by 46,300, act as resistance for Bank Nifty, analyst said Read here: HDFC Bank Q3 Results Highlights: Net profit rises 33% to ₹16,372 crore, NII up 24% YoY HDFC Bank shares witnessed 15% slide in five sessions after it reported Q3 results.

The bank posted net profit growth of 33% year-on-year (YoY) to ₹16,372 crore, while its net interest income (NII) rose 24% YoY to ₹28,470 crore. The bank has grown its deposit base by 1.9% QoQ but retail deposits have grown by 2.9% QoQ. Management has cautiously reduced the wholesale deposit base from ~17% of total deposits in March 2023 to 16% in December 2023.

This is because wholesale deposits have been volatile as well as expensively priced due to the negative systemic liquidity, analysts said. “However, in case of a genuine credit growth momentum, raising wholesale deposits will not be a challenge for the bank. Thus, raising deposits is not a major challenge but rather we believe that with a rising geographic expansion, HDFC Bank is better placed to gain retail deposit market share from public sector or PSU banks," said