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Derivatives outlook as banking sector enters the results season
July 20, 2023
The earnings season in the banking sector has begun, with prominent players like HDFC Bank and ICICI Bank announcing their financial results.
On July 17, HDFC Bank declared its quarterly results for the April-June period of FY24, reporting a net profit of ₹11,951 crore. This figure represents a significant jump from ₹9,196 crore reported a year back. The bank’s bottomline slightly surpassed market expectations, showcasing its robust performance.
As for ICICI Bank, its results are yet to be announced, building anticipation among investors and analysts.
Experts say that the futures and options data suggest that banking stocks have been consolidating in anticipation of the results, without showing much weakness.
Raj Deepak Singh, Derivatives Research Head at ICICI Securities, stated that open interest in the Bank Nifty is relatively low, indicating lower downside risk at current levels. Singh also attributed the recent relative underperformance in the banking space to the ongoing sectoral rotation, which has diverted some attention away from banks.
Rajesh Shrivastava, a derivatives trader, and analyst, expects the bullish trend in the banking sector to continue. “The recent upswing in the IT sector can be viewed as a counter-trade strategy by investors who are booking profits in banks ahead of the earnings announcements. Banks are currently in a bullish phase, and we expect this trend to continue, albeit with some profit-booking prior to the results.”
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