Foreign Institutional Investors Boost Bank Stock Investments

Foreign Institutional Investors Boost Bank Stock Investments

Foreign institutional investors (FIIs) have been actively purchasing bank stocks in recent trading sessions, based on data from NSE futures and options (F&O). The total index futures contracts bought by FIIs on Wednesday reached 56,911, with a significant portion allocated to Nifty Bank contracts. In terms of value, FIIs were net buyers of index futures, with a notable amount spent on Bank Nifty futures contracts on June 19.

This buying spree has propelled the Nifty Bank index to achieve new highs, hitting levels of 51,957 on Wednesday and maintaining stability amidst volatile trading. The appeal of bank stocks to FIIs is attributed to the banking and financial services (BFSI) sector being viewed as a strong indicator of India's growth potential. Kranthi Bhathini from WealthMills Securities highlighted that the sector is of particular interest to investors due to the 'India growth' story and the recent underperformance of bank stocks, making them an attractive catch-up option.

The upward trend in bank stocks has seen the Nifty Bank index surge over 11% since June 4, with notable gains for specific banks like Bank of Baroda, IDFC First Bank, The Federal Bank, and Bandhan Bank. Analysts at Macquarie have a positive outlook on private banks, expecting healthy returns in the coming years with a favorable ROA and ROE range. Technical analysis suggests further potential for the Nifty Bank index to test higher resistance levels, with predictions of a rally towards 54,500 while maintaining positivity above certain key levels. Analysts anticipate a range-bound trading scenario in the near term, with bullish momentum to prevail if certain resistance levels are breached.