Why Axis Bank Share Price is Rising

In the current market rally, stocks in the financial segment have emerged as the true heroes, driving the benchmarks to their all-time highs.

A few months ago, public sector banks (PSBs) shined in the limelight, while private players took a back seat.

However, the tide has turned it seems. In the last five days, both the Nifty private bank index and the Nifty PSU bank index have dazzled with identical returns of around 6.5%.

Private banks which were lagging their counterparts have picked up pace.

One standout performer is Axis Bank amid this rally. The stock has offered investors 11% returns in just one week.

So, what's fueling this rally in Axis Bank?

Let's find out...

#1 Positive Sentiment in Bank Nifty Index

On 4 December 2023, the bank nifty index rallied over 1,600 points, around 3%, reaching a new high of 46,484 levels.

This is the highest single-day gain since April 2022. The rally was driven by the BJP's strong state election performance.

On 5 December 2023 at the time of writing, the bank nifty index has continued its rally adding another 500 points.

This surge can be attributed to the optimism within the banking sector and this positive sentiment is influencing the share price of all banking stocks including Axis Bank.

Secondly, market experts anticipate political stability in 2024, expecting positive momentum in India's macroeconomics and politics.

With India leading in GDP and corporate earnings growth, the banking sector is likely to see increased financial activities, more investments, and greater market participation, all contributing to a positive performance in banking stocks.

Moreover, the overall outlook for the banking sector has shown signs of improvement.

Investors are showing confidence in the banking sector's outlook. This is driven by attractive valuations, strong balance sheets, robust asset quality, and decent credit growth.

The overall positive sentiment surrounding bank stocks is contributing to the rally in Axis Bank's share price.

#2 Citi-Axis Bank Deal Starts Paying Off

If you remember, back in March 2023, Axis Bank completed the acquisition of Citibank India's consumer banking business to enhance its wealth management platform.

It's been nine months since the acquisition and now the deal is slowly paying off.

Here's how...

At the time of acquisition, Axis Bank had a strong focus on growth of its wealth management business and with that motive, they were able to retain most Citibank customers post-merger.

As Citibank's credit card business is now owned by Axis Bank, it has been a valuable asset for the bank. The average spending on Citi's cards have decreased over time, but it still remains above the industry average.

The primary reason customers are not shifting to other options after the acquisition of Citibank India's retail business is because Axis Bank is offering them better rewards and benefits.

Here's what the bank did...

To retain as many Citi customers as possible, Axis Bank adjusted their existing products and introduced new ones too. For example, it has created an equivalent of Citi's rewards card, retaining the benefits of a 15% discount with no caps.

Axis has taken over the partnership with duty-free shops in India, ensuring customers continue to enjoy the same benefits.

Furthermore, the bank has reintroduced discounts for Citi customers during Flipkart's big billion day sale, which was discontinued by Citibank.

Moreover, Axis Bank is cross selling its products to the acquired customers like alternative investments, mutual funds, broking and portfolio management services which is driving profits to its wealth management platform.

The management believes that the bank is already running slightly ahead of its financial targets set for the financial year 2024.

Apart from all of this, recently, Axis Bank also joined hands with Air India. Under this partnership, the credit card customers of Axis bank will now be able to transfer their edge reward points to Air India flying returns points.

This deal will not only enhance the benefits for Axis Bank credit card users but will also open up new opportunities for travel-related transactions.

What's Next?

In the September 2023 quarterly results, Axis Bank reported a strong balance sheet with visible improvement in asset quality and consistency of earnings, driven by strong margins.

Loan growth was observed across all three segments - retail, corporate, and micro, small and medium enterprises (MSME).

The management said that the bank recorded the best current account, saving account (CASA) ratio in the sector.

Also, they are optimistic about credit and deposit growth in the banking system, expecting it to be around 13% for the current fiscal year.

Axis Bank is currently focusing a lot on digital and tech as this will help them stay in line with the evolving trends of the banking industry.

The management has also expressed its ambition to build a fully digital bank through its mobile banking app.

How Axis Bank Share Price has Performed Recently

Axis Bank share price has gained 11% in the last five days and more than 20% in 2023 so far.

The company touched its 52-week high of Rs 1,151 on 5 December 2023 and its 52-week low of Rs 814 on 16 March 2023.

Foreign Institutional Investors (FIIs) have increased their stake in Axis Bank by 8% on a year on year (YoY) basis.

As of the September quarter in 2023, FII now account for 53% of the company's stake, a notable increase from the 46.1% stake they held during the same time last year.

Explore Axis Bank's detailed shareholding pattern here.

About Axis Bank

Axis Bank is the third largest private sector bank in India. It acquired Citibank's consumer businesses, which includes loans, credit cards, wealth management and more on 1 March 2023.

Today, Axis bank is the fourth largest issuer of credit cards and the second largest merchant-acquiring bank in India.

The bank has over 4,750 branches, 16,900 ATMs and cash deposit and withdrawal machines across metro, semi urban, urban, and rural areas.

For more details about the company, you can have a look at the Axis Bank fact sheet and quarterly results on our website.

You can also compare the company with its peers.

Axis Bank vs HDFC Bank

Axis Bank vs ICICI Bank

Axis Bank vs PNB

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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