Kotak Mahindra Bank Leads The Banking Stock Rally- Find Out What Lead To This Surge

Banking stocks continued in green with Kotak Mahindra Bank emerging as a key mover in today’s trade. This Mumbai-headquartered bank registered sharp intraday gains which led the stock price surge nearly 3 per cent to touch Rs 2,134.50, elevating the lender’s market capitalisation past Rs 4.05 lakh crore.

This was fuelled by the Reserve Bank of India’s (RBI's) Cash Reserve Ratio (CRR) cut. Other top gainers in  today's trading session inlcuded AU Small Finance Bank Ltd, Canara Bank, and Axis Bank. 

The jump in share price of this banking and fincial services major was due to surge in investor interest, making it the top banking stock in trade on Monday, June 9 under Nifty Bank Index, which hit a lifetime high by surpasing 57,000 mark for the maiden time. 

Meanwhile, shares of HDFC Bank rose 0.82 to hit an intraday high of Rs 1,995 apiece. 

Key Reasons Behind Banking Stock Rally 

The surge in the banking stocks was a result of India's central bank reducing the cash reserve ratio (CRR) by 100 (basis points) bps to 3 per cent of net demand and time liabilities (NDTL), which is estimated to infuse primary liquidity of ₹2.5 lakh crore into the banking system, helping reduce cost of funding for banks and resulting in faster policy transmission.

Despite recent short-term underperformance - down 2.63 per cent over the past month and 1.09 per cent in the last six months - Kotak Bank has delivered a respectable 5.4 per cent return over the previous quarter, indicating a potential turnaround. Today’s gains contrast with last session’s close of Rs 2,073.40, when the stock ended 1.62 per cent lower.

From a technical viewpoint, the stock has broken above key resistance levels and is currently trading above its R2 level of Rs 2,115.13, a signal often associated with bullish momentum. The stock’s six-month beta of 0.91 also reflects relatively lower volatility compared to the broader market.

The rally in banking stocks has been credited to supportive macro signals, including recent liquidity-friendly moves from the Reserve Bank of India, such as a policy rate cut and reduction in the cash reserve ratio. These measures have bolstered sentiment across the sector, with Kotak Bank emerging as a key beneficiary.