Bank Nifty Tumbles by 1.5% With Brent Crude Crossing $125; Axis Bank, Canara Bank Fall Most

Banking shares plunged heavily on Thursday, April 30, as the index Bank Nifty lost almost 1.5% with global crude oil prices breaching the mark of $125 per barrel.

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The Bank Nifty slipped as much as 1.7% during intraday trade before recovering some losses later in the session. Out of the 14 constituents in the index, 12 stocks were trading in the red.

Axis Bank and Canara Bank led the decline among major lenders, while broader private bank and PSU bank indices also fell up to 2%.

PSU Banks Under Pressure

Public sector banking stocks witnessed the sharpest selling pressure during the session. Indian Bank declined more than 3%, while all 12 constituents of the PSU Bank index traded lower. Other state-run lenders also remained under pressure as investors reacted to rising crude oil prices and concerns over inflation.

The weakness in banking shares came as Brent crude prices surged following continued disruption in Middle East oil supplies.

Crude Oil Prices Surge Above $125

Brent crude for June delivery rose 6.2% to $125.36 per barrel during the session, while the more active July contract gained 3.1% to $113.85 per barrel.

Before the escalation of the Iran conflict in February, Brent crude had been trading near $70 per barrel.

Oil prices have risen sharply after the U.S. maintained its blockade of Iranian ports, while the Strait of Hormuz remained effectively closed, tightening global supply conditions.

The Strait of Hormuz is considered one of the world’s most important energy shipping routes and previously carried nearly 20% of global oil trade.

Banking Stocks React To Inflation Concerns

The significant spike in crude oil prices has raised fears over possible inflationary risks and bond yield increases, thereby having an adverse effect on treasury earnings and the cost of borrowing for banks.

An increase in fuel prices will also have implications for liquidity and demand for credit in sectors vulnerable to cost pressures.

The broader market also remained weak during the session. Benchmark indices traded lower as investors tracked global commodity prices and geopolitical developments in West Asia.

Market Levels In Focus

According to SBI Securities, immediate support for Bank Nifty is placed in the 55,000-54,900 zone.

The brokerage noted that a sustained move below this range could drag the index toward 54,600 and then 54,300 in the short term. On the upside, the 55,900-56,000 zone is expected to act as immediate resistance.

The drop in bank shares is happening as the market continues to watch the prices of crude oil, as well as global inflation concerns and events surrounding the conflict between the United States and Iran.