Shares of Axis Bank rose over 4% after the bank reported a 3% year-over-year increase in its third-quarter net profit on Monday, indicating consistent operational performance in a troubled economy. Analysts pointed to strong lending, higher fees and managed non-performing assets as the driving forces in the bank’s growth amid a recovery in the private banking sector.
Axis Bank's positive momentum was the opposite of the big traders in the market. Some of the biggest losers in the trading session included Kotak Mahindra Bank and Mahindra & Mahindra (M&M). Kotak Mahindra Bank was facing selling pressure with investors on the fence for higher provisions and slowing loan growth, while M&M limped on weak local auto sales and profit-booking by investors following a recent rally.
Market watchers commented that the difference between Axis Bank and peers reflects the inconsistent recovery across sectors as some recovery is uneven across some of its peers. Private lenders with a solid retail and corporate lending portfolio to their credit books to clients are seeing steady growth with strong gains, but a number of industrial and auto shares are still battling for traction due to softer demand and increased input costs.
“There is an optimism to all investors in the stock market that is mixed in being, at least somewhat, hopeful and cautious,” added one analyst at a large brokerage firm to the market. “Axis Bank’s recent quarterly performance has given investors more confidence about its core banking operations, but credit costs and sectoral demand concerns are pressuring other counters such as Kotak and M&M.”
Investors are focusing on near-term earnings updates, monetary data and policy developments that likely will impact sectoral movements. As earnings season continues to be at the forefront, stocks are on track to remain volatile over the coming weeks, as investors are re-evaluating company fundamentals in reference to macroeconomic trends.
