Will Bank Nifty continue its momentum amid concerns about a global recession?

Last week, the Dow Jones & S&P 500-led global recovery helped Bank Nifty (NIFTY BANK), India’s main banking index, conclude on a solid note with an increase of more than 1.5%. Indian stock market benchmark indices Sensex and Nifty also surged over 1% each and closed the week above crucial support levels. Most of the front-line stocks led by heavyweights in technology and banking help in regaining lost momentum. A few leading technology stocks, including Infosys and HCL Technologies, reported Q2 earnings that were above expectations, which helped to improve market confidence in general.

It was easy to see optimism throughout the global recovery because the banking stocks have already outperformed others in the most recent few weeks. The street was eagerly awaiting HDFC bank’s Q2 results, so investors massively entered long positions there last Friday as a result of the stock’s surge of over 3%, which helped the Bank Nifty increase overall by more than 1.5%.

If we see the overall stocks in the NIFTY BANK index only 4 stocks closed in minor red, out of 12 stocks there. Eight stocks closed the day on a positive note led by Federal bank which was up 4.68% followed by HDFC bank up over 4.5%. Other gainers were AUBANK, ICICI, Kotak, and public sector leader SBI which were up over 1.5% each.

Now the next trend of the Bank Nifty will depend on the move of global markets in the next week. When the Indian market closed the day on Friday all futures of the U.S. market were up by more than half percent. However, Friday night’s closing of the Dow Jones and Nasdaq was quite weak due to worries about a potential recession and additional Fed rate hikes.

Even if the eagerly anticipated Q2 result provided by HDFC bank on Saturday will establish a pattern for the Bank Nifty in the coming days, the Indian market must now respond to poor global cues on Monday. The primary catalysts for Bank Nifty’s upward movement will also be determined by the US dollar index, the rupee’s value against the dollar, the movement of crude oil, and the 10-year US bond yields.

Significant highlights of HDFC Bank’s second-quarter result released on Saturday

The HDFC Bank showed a significant improvement across all parameters, including net profit, credit growth, deposit growth, and asset quality, according to the bank’s Q2 financial results. It’s a clear indication of outperformance, the lender has performed well above the street estimates.

The bank’s standalone PAT grew 20.1 percent YoY to Rs 10,605.8. Analysts predicted a 16% increase in net profit for the second quarter of the fiscal year.

As of September 30, 2022, HDFC Bank had advanced a total of Rs 14.4 lakh crore, a 23.4 percent increase from the previous year. The balance sheet size climbed by about 21% to Rs 22.3 lakh crore from Rs 18.4 lakh crore during the same time last year.

At the end of September, the bank’s total deposits climbed by 19% YoY to reach Rs 16.73 lakh crore. Savings account deposits at Rs 5.30 lakh crore and current account deposits at Rs 2.3 lakh crore, Current Account Savings Account (CASA) deposits climbed by 15.4%.

When it comes to asset quality, the lender saw an improvement in Q2 of the fiscal year 2022–2023. Gross non-performing assets declined from 1.35% of the book to 1.23% in compared to the same time last year and from 1.28% in the prior quarter.

Making a balance between the Q2 results and the current state of the world market will now be the main focus of market participants.