MUMBAI : Analysts expect the shares of Kotak Mahindra Bank Ltd to open higher on Monday, potentially outperforming benchmark indices, driven by the banking regulator’s approval of the managing director and chief executive candidate and quarterly earnings that met analysts’ expectations.
Friday’s delivery-to-traded volume at 72.13% was the highest since 14 July (83.59%). This was accompanied by the active futures contract’s outstanding positions reducing by 17%, a sign of bears closing out short positions in anticipation of a significant development.
“The action on the stock counter ahead of the Reserve Bank of India approval of Ashok Vaswani as the MD and CEO of the bank and the decent Q2 results raise the possibility of a gap-up opening Monday even as markets are likely to pull back given rising bond yields in the US and uncertainty due to the Israel war,” said Siddhartha Khemka, research head (retail), Kotak Mahindra Bank.
The bank reported a 24% rise in standalone net profit of ₹3,191 crore, beating Motilal Oswal’s estimates. The net interest income, or difference between interest earned and paid, grew 23% to ₹6,300 crore, in line with brokerage estimates.
The gross non-performing asset (GNPA) ratio improved by 5 basis points (bps) while net NPA improved by 3bps quarter-on-quarter to 1.72%/0.37%, respectively.
The total shares that changed hands on Friday stood at 2.94 million against the traded quantity of 4.07 million. Meanwhile, the futures contract that expires on 26 October saw outstanding positions decline by a significant 11,560 contracts or 17.03% to 56,325 contracts.
A decline in outstanding positions, coupled with rising prices, suggests that bears are covering their short positions, resulting in an upward price movement.
The stock has outperformed the Bank Nifty index since 15 September, when the markets hit a record high, falling by 2.44% against the latter’s 5.4% pullback.
The Nifty 50 has fallen 3.4% from a record high of 20,222.45 on 15 September to 19,542.65 on 20 October. The US 10-year treasury yield traded at 4.928% on Friday, which is close to a 16-year high.
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Updated: 22 Oct 2023, 11:56 PM IST