Kotak Mahindra Bank gains 4.7%, Banking, IT stocks pull market up

Stock market today: In the early trading session on Monday, Kotak Mahindra Bank was pushing the market up as it gained 4.76 per cent or 73.65 points to reach Rs 1,621 apiece as of 10:13 am. 

The positive momentum for the bank was driven by strong Q4 performance and Jefferies upgrading the rating for the bank from ‘Neutral’ to ‘Outperform.’ 

The price rise in the banking major’s stocks followed its CEO Ashok Vaswani’s public assessment of the impact of a recent regulatory directive from the Reserve Bank of India (RBI) on the bank's operations and reputation.  Vaswani acknowledged the adverse effects of RBI’s action on both the bank's franchise and standing within the market.

IndusInd Bank, ICICI Bank, Axis Bank, and HDFC Bank were other leading industry stocks trading in green and driving the NIFTY Bank index, which was showing a 0.29 per cent rise. 

Meanwhile, leading IT stocks including Tata Consultancy Services, Infosys, HCL Tech, and Wipro were among the other top gainers, propelling a strong positive momentum in the market. The NIFTY IT index was up by 1.24 per cent at 33,315.50 points. 

Jefferies upgrades Kotak Mahindra Bank’s rating

Jefferies, a leading brokerage firm, has upgraded its rating on Kotak Mahindra Bank Ltd from ‘Neutral’ to ‘Outperform’. The decision comes alongside a suggested share price target of Rs 2,070 for the banking major. The upgrade is underpinned by several factors, including compelling valuations, robust 20 per cent loan growth, solid asset quality, ample liquidity, and healthy pre-provision operating profits. 

Furthermore, Jefferies projects Kotak Mahindra Bank's compound balance sheet to grow at a rate of 16 per cent annually over the next two years, even after normalising return on asset (ROA). This optimistic outlook underscores the bank's resilience and potential for sustained growth in the foreseeable future.