Shares of State Bank of India, the nation's largest lender, experienced a powerful rally on Monday, climbing approximately 7.5% to close near 1,146 rupees. The surge followed the bank's release of its quarterly financial results, which significantly exceeded market expectations. The stock briefly touched an all-time intraday high of 1,148 rupees during the session, underscoring the strong investor sentiment.
Record-Breaking Quarterly Performance
The bank reported a net profit of 210.28 billion rupees for the December quarter, marking a substantial 24.49% increase compared to the same period last year and setting a new record. This performance was driven by robust growth in core operations, with net interest income rising 9.04% year-on-year. The domestic net interest margin remained stable at 3.12%. A key highlight was the continued improvement in asset quality; the gross non-performing asset ratio declined to 1.57%, representing a 50 basis point improvement from the previous year.
Chairman C.S. Setty attributed the strong results to supportive macroeconomic policies, including recent trade agreements and budget measures, which are expected to bolster economic demand. Consequently, the bank has revised its credit growth forecast upward for the current financial year, now projecting growth in the range of 13% to 15%, up from the prior guidance of 12% to 14%.
Analyst Reaction and Revised Targets
The positive earnings print prompted swift action from brokerage firms. At least nine analysts raised their price targets on the stock. Notable upgrades included Emkay Global lifting its target to 1,225 rupees and Citi increasing its target to 1,265 rupees. While analysts praised the bank's strong execution, some, like those from Elara Securities, noted that future performance may hinge more on broader macroeconomic tailwinds than on immediate company-specific catalysts.
The rally in SBI shares provided a lift to the broader financial sector. Market observers pointed to a resurgence in foreign investor interest as a contributing factor. V.K. Vijayakumar, chief investment strategist at Geojit Investments, highlighted that foreign institutional investors had been net buyers in the cash market on three of the last four trading days, with improved risk appetite linked to developments like the U.S.-India trade framework.
Macroeconomic Data in Focus
Looking ahead, investor attention is shifting to upcoming macroeconomic indicators that could influence the trajectory of banking stocks. India's retail inflation data for January is scheduled for release on February 12. This figure is a critical input for the Reserve Bank of India's monetary policy decisions. A higher-than-expected print could revive concerns about interest rate hikes, potentially impacting bond yields and, consequently, bank treasury portfolios and net interest margins.
The strong quarterly results have undoubtedly raised the bar for future performance. Analysts caution that the rally may have narrowed the margin for error. Potential headwinds include a tightening of funding conditions, a sharp rise in bond yields, or a moderation in loan growth following a seasonal surge. Any disappointment on these fronts could trigger a reversal in the stock's recent gains.
In the immediate term, traders will monitor whether SBI can sustain its momentum above recent breakout levels. The performance of other state-run lenders will also be watched for confirmation of sector-wide strength. Market direction in the coming sessions is likely to be influenced by further broker commentary and evolving expectations surrounding interest rates and economic data.