The Bank Nifty has surged to a new all-time high above 55,000. In fact, the Bank Nifty has risen nearly 8% in 5 days and 9% in last 1 month. It has gained over 8% so far in 2025 and the Index has yielded more than 15% returns on a 1-year basis. The upsurge this morning is driven by strong Q4 earnings from the county’s largest private sector lenders HDFC Bank and ICICI Bank. Both banks delivered better than estimate results, slippages were significantly lower and the deposit and loan growth trajectory remains encouraging.
The entire list of bank stocks are on a high this morning. Though many brokerages have signalled that there could be some near-term pressure die to rate cuts, the overall outlook for banking and NBFCs appear encouraging. According to Nomura, “the banking sector liquidity is now in surplus. The credit supply is further supported by reduction in risk weights for MFI and NBFCs. The ebbing of the asset quality concerns also make case for higher willingness to lend.”
Three reasons why bank stocks are surging today
The bank stocks are surging on a host of reasons but most importantly on the back of the strong earnings from HDFC Bank and ICICI Bank.
HDFC Bank target raised as high as Rs 2,660 (47% upside)
HDFC Bank delivered stellar numbers for Q4. The significant reduction in slippages led to string Buy recommendation from most brokerages with some raising the target as high as 47% from current levels. This has lifted the overall sentiment in the market and many investors are focussing on the banking sector as they look out for promising bets.
ICICI Bank: Brokerages give a thumbs up to Q4 earnings
Most brokerages are bullish on ICICI Bank after the bank delivered strong Q4 earnings. According to them, the private lender, not only put up a strong show in terms of earnings growth but margins and asset quality also improved despite the tough macro environment.
RBI Liquidity measures boost sentiment
According to BNP Paribas, ‘the key differentiating factor is the enhanced liquidity and greater support on credit policy from RBI to start a small credit acceleration – at 13%, about 150bps over the 11.5% seen in FY25.” BNP Paribas’ growth expectation is at 13% for FY26, well ahead of consensus. “The dry powder for such an acceleration, in terms of balance-sheet health and capitalisation, has already appeared best-in-decades for the last three years. We believe the recent acceleration will still continue to see single-digit corporate loan growth,” the report stated.