Kotak Mahindra Bank, consumer stocks drag Indian shares lower

BENGALURU: India’s benchmark indexes fell on Thursday as financials weighed, dragged down by Kotak Mahindra Bank, while consumer stocks fell after an earnings miss from sector giant Hindustan Unilever.

The NSE Nifty 50 was down 0.11% at 22,376.10 as of 9:58 a.m. IST, while the S&P BSE Sensex dropped 0.10% to 73,780.80.

High-weightage financial services and private banks shed 0.25% each.

Kotak Mahindra Bank tumbled 10.1% to be the top Nifty 50 loser after India’s central bank barred the private lender from taking on new customers through its online and mobile banking channels.

“Sentimentally, the RBI (Reserve Bank of India) decision on Kotak Mahindra Bank is going to hurt the lender,” Anita Gandhi, director at Arihant Capital Markets said.

“While Kotak bank has one of the best fundamentals, it also has one of the highest valuations in the banking pack. Some amount of correction and valuation adjustment will happen,” Gandhi said.

Indian shares inch up, led by metals and auto stocks

The trailing 12-month price-to-earnings ratio for Kotak Mahindra Bank is at 20.99, higher than that for peers like HDFC Bank, ICICI Bank and IndusInd Bank, indicating a high valuation, according to LSEG data.

The Nifty 50 is unlikely to see a significant drop because of sustained domestic buying and fourth-quarter results mostly in line with expectations, Gandhi said.

Axis Bank jumped 4% to be the top Nifty 50 gainer after the private lender beat quarterly profit estimates.

The consumer index fell 0.4%, with Tata Consumer Products and Hindustan Unilever falling between 1%-2% after they missed their March quarter earnings estimates.

IT company LTIMindtree fell 1.6% after missing fourth-quarter revenue estimates on weakness in banking vertical and client spending.

Non-bank lender Mas Financial Services climbed 7% after posting a rise in March-quarter profit.