Stock Of The Day: Kotak Mahindra Under Bearish Pressure As Bulls Struggle To Keep Up Force

Shares of Kotak Mahindra Bank Ltd. see renewed bearish pressures as a top executive of the lender exited, while the scrip remained range-bound for the last 12 months.

The scrip of the private lender currently tests the 21-day exponential moving average and takes support there at the Rs 1,780 mark. The counter, however, is still above the 14-day simple moving average. A breakout of immediate support could send the stock down to the Rs 1,770 level.

The stock has fallen 2.2% during the last 12 months. The total traded volume so far in the day stood at 1.3 times its 30-day average. The relative strength index was at 52.

The counter saw a momentum switch to the upside on the last trading day of 2024, however, today's decline could switch the near-term momentum to the downside.

The stock's immediate resistance will be the engulfing candle's closing level of Rs 1,840 on Dec. 31, which is also near a 2-standard deviation above the 14-day moving average.

The scrip fell as much as 2.97% on Monday while the benchmark Nifty 50 index rose 1.2%. The stock briefly traded in the 'correction territory' in October and had fallen by 6.4% in 2024.

Twenty-seven out of the 44 analysts tracking the company have a 'buy' rating on the stock, 12 suggest a 'hold' and five have a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 3%.

Milind Nagnur, chief operating officer and chief technology officer at Kotak Mahindra Bank, resigned from his position, the bank said on Friday. According to Nagnur's resignation letter, he is resigning from his position due to personal reasons.

"I am resigning for personal reasons and plan to relocate back to the US to care for family members. Our agreed-upon final date for me at the firm will be Feb 15, 2025," Nagnur said in the letter.

Nagnur joined Kotak Mahindra Bank in August 2022 as CTO to help with the bank's technological transformation. In February 2024, a month after Kotak Mahindra Bank's new MD & CEO Ashok Vaswani took charge, Nagnur was given the added responsibility of managing operations.

Citi Research recently upgraded the stock to 'buy' while opening a 90-day positive catalyst watch expecting stability in loan growth and lesser compression in margins in the third quarter.

Revamped focus on ActivMoney deposits and wider outreach, strong momentum in advances growth and the extent of NIM moderation at 6-7 basis points sequentially are the key positives for Kotak, Citi said. "Lifting of regulatory restrictions will be key incremental trigger."

Citi also said that Indian banks’ fiscal third-quarter earnings may show a slowdown in credit growth and higher slippage. The loan growth may slow to 2% to 3% sequentially due to deceleration in micro-loans, weak corporate demand and adverse housing-related events, Citi said.

Rise in net interest income lifted Kotak Mahindra Bank's standalone net profit by just 4.8% year-on-year to Rs 3,344 crore in the second quarter. The profit rise was limited due to a sharp rise in provisions by the bank and deterioration in asset quality.