The Bank Nifty index continued its winning run on September 18, marching higher for the 12th straight session as heavyweight lenders extended gains. Shares of Axis Bank, SBI, Kotak Mahindra Bank, and ICICI Bank have surged up to 7 percent during this streak, with brokerages turning optimistic on the credit growth cycle.
Analysts believe the outlook for Indian banks is strengthening, aided by stabilising asset quality and a supportive policy backdrop from both the government and the RBI. The sentiment received another boost after the US Federal Reserve cut rates by 25 basis points in its latest meeting, sparking expectations that the RBI could follow suit when it reviews monetary policy in October.
In the past 12 sessions, the Bank Nifty has climbed nearly 4 percent, outpacing the Nifty 50’s 3 percent rise.
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According to Nomura, unsecured retail loans - currently around 10 percent of system credit are poised for faster growth, supported by cleaner balance sheets. Analysts highlight that an improving asset quality profile, policy easing, liquidity infusion, and tax relief measures all set the stage for stronger credit expansion.
India’s retail lending ecosystem is also showing early signs of recovery. Personal loans have seen improvements in the 31–90 days past-due category, while early-stage delinquencies in credit cards (1–30 days) have dropped by 120 basis points year-on-year and 20 basis points quarter-on-quarter. Small business loans, too, have held asset quality steady on an annual basis.
Motilal Oswal Financial Services (MOFSL) expects banking stocks to extend their outperformance as earnings improve and management commentary turns more constructive. The brokerage pointed to a demand uptick aided by GST rate cuts and progress in tariff negotiations as further sentiment boosters for the sector.
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