IndusInd Bank shares down 6% from day's high; why the stock is defying market rally

Shares of IndusInd Bank cracked more than 6 per cent from its day's high at Rs 839.80, defying the stock market rally on Monday. The stock was down 3.87 per cent from its previous close at Rs 817.85 on Friday as the stock crumbled to Rs 786.15 during the day. The total market capitalization of the lender stood below Rs 61,250 crore.

Interestingly, IndusInd Bank was defying the bull run even as BSE Sensex surged about 2,880 points, or 3.62 per cent, during the day to hit 82,333.49 mark during the day.

The sharp correction in the rallying market came under the backdrop of its rating downgrade by Moody's Investors Services. In its exchange filing with the bourses, IndusInd Bank said that Moody's has reaffirmed the Credit Ratings of the Bank, revised the outlook to 'negative' and downgraded Bank’s baseline credit assessment (BCA) and adjusted BCA to ba2 from ba1, it said.

Earlier to this, another rating agency gave 'Crisil AA+' rating on the long-term debt instruments on ‘Rating watch with Negative Implications’. Short-term rating has been reaffirmed at ‘Crisil A1+,' said the company in an exchange filing with the bourses.

IndusInd Bank Ltd has remained under the spotlight amid the top management rejig after its MD and CEO Sumant Kathpalia resigned from his position in relation to the accounting discrepancies seen in the derivatives portfolio. The moves came a day later after Deputy CEO Arun Khurana's resignation.

IndusInd Bank was among the stocks which saw the highest EPS cut of 8.9 per cent by JM Financial. It currently has a 'buy' rating on the lender with a target price of Rs 765. Motilal Oswal has a 'neutral' rating on IndusInd Bank with a target price of Rs 850

"Our prognosis for large banks is that of benign margin expansion or, at the very least, stability in 2HFY26 after a shallow bottom in 1HFY26. Thus, we expect reasonable credit growth to translate into concurrent earnings growth momentum for banks in FY26 – a key catalyst for re-ratings," said BNP Paribas.

"We believe the timing of rate cuts will be key to the margin pivot point and gradient," it said with a negative rating and a target price of Rs 860 on IndusInd Bank