InvestorQ : What explains the sharp rally in banking stocks in the last couple of days; especially private banks like HDFC Bank, Axis and IndusInd?
ishika Banerjee made post

What explains the sharp rally in banking stocks in the last couple of days; especially private banks like HDFC Bank, Axis and IndusInd?

Answer
user profile image
Niti Shenoi answered.
4 months ago


Banks and NBFCs took the Street by surprise in the last two days. Nifty Bank surged 12% in just two days flat. To an extent, it can be explained by short covering. Short positions are now being covered ahead of the expiry today. Apart from the short covering factor, another reason is also that most of the negatives are priced in. Banks had been under pressure due to a combination of below par earnings, extended moratorium and overall weak sentiment in the market. Most analysts believe that private Banks would be better placed in terms of capital adequacy and credit costs to emerge stronger from this crisis. That explains why the rally was restricted to the private banks rather than spreading to the PSU banks also.