Kotak Mahindra Bank Defies RBI Hike Gloom to Lead Sensex Gainers After HSBC Upgrade

On a day when most rate-sensitive stocks were under pressure, Kotak Mahindra Bank moved the other way. The private lender climbed close to 2% in afternoon trade on Wednesday, touching about Rs 440.70 against Tuesday's close of Rs 431.90, and sat at the top of the Sensex gainers list around midday.

The broader market was in a far weaker mood. By about 1 pm the Sensex was down roughly 244 points at 72,823.62, and the Nifty 50 had lost about 124 points to 22,651.70, as traders digested the Reserve Bank of India's decision to lift the repo rate to 5.50% and switch to a calibrated tightening stance (see our coverage of the RBI decision). The India VIX, a gauge of expected volatility, was up around 2.7% near 14.

Why HSBC changed its mind

The trigger for Kotak's outperformance was a rating upgrade from HSBC, which moved the stock to Buy and lifted its price target to Rs 520 from Rs 430. That implies upside of around 18% from Wednesday's trading levels. The brokerage pointed to three things: faster loan growth, a stronger outlook for earnings per share, and the end of uncertainty over who will run the bank next. HSBC also raised its EPS estimates for FY27 to FY29 by between 1% and 14%.

HSBC is not alone. Goldman Sachs, which already rated the stock a Buy, raised its own target to Rs 540 from about Rs 416 earlier this week, arguing the bank can compound earnings at close to 19% a year through FY29.

The numbers behind the call

The optimism rests on a provisional business update for the July-September quarter released on Monday:

• Net advances rose 24.7% year on year to about Rs 5.77 lakh crore, and were up 12.7% from June alone.
• Total deposits grew 23.2% to roughly Rs 6.51 lakh crore.
• CASA deposits, the cheap current and savings account money that matters most for margins, rose a slower 11.3% to around Rs 2.49 lakh crore.

Part of the jump came from about $5.78 billion of FCNR(B) foreign currency deposits raised through the RBI's swap window, so the headline growth is flattered somewhat by that one-off source of funds.

Leadership question settled

For much of the past year, investors had been uneasy about succession at the top. That overhang has now eased. The RBI has approved Anup Kumar Saha as managing director and CEO for three years starting January 1, 2027, and analysts say that clarity is a big part of why the stock is being re-rated.

What could still go wrong

The quarterly figures are provisional and still subject to a limited review by auditors. The full results will show whether the rapid growth in the loan book is turning into profit, or whether it is being bought with thinner margins and higher credit costs. The slower growth in CASA deposits, compared with total deposits, suggests funding costs could rise. A rate hike cycle can help banks earn more on loans, but it also pushes up what they pay depositors.

At around Rs 440, the stock is trading about 3% below its 52-week high of Rs 453.20, and its market value is close to Rs 4.4 lakh crore. Kotak's gain stood out against the day's biggest Sensex laggard, Titan, which fell nearly 4% after a disappointing quarterly update (read more here). Together, the two moves show that stock-specific news, rather than the rate decision alone, drove many of Wednesday's biggest swings.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.