Axis Bank slumps 6 per cent; drags down Bank Nifty

Private sector lender Axis Bank slumped as much as 6 per cent with a gap down opening in the early session on Friday, courtesy weak set of Q3 earnings as asset quality continues to weigh on the banking major.

Axis Bank stock's poor performance dragged down Bank Nifty as it was trading lower with half a percentage point loss in early morning trade. Axis Bank disappointed streets as it delivered a 73 per cent decline in profits for Q3 with margin contraction.

The profits for Q3 took a hit due to less than expected growth of net interest income and higher provisioning figure in the quarter to provide for bad loans.

However, the bank's retail advances grew 19 per cent YoY and stood at Rs 1.49 lakh crore and accounted for 43 per cent of net advances. Its corporate credit grew 4 per cent YoY and stood at Rs 1.54 lakh crore and accounted for 44 per cent of net advances,

Its net interest margin contracted to 3.43 per cent in Q3 as against 3.64 per cent. Axis Bank has said that its watch list loans had reduced to 2.8 per cent of customer assets in December 2016, 

Axis Bank stock is likely to underperform in the short to medium term, given the poor performance. However, one should keep an eye on the stock as it may touch new lows and, therefore, may offer attractive valuations.