Nifty Bank tops 55K milestone as HDFC, ICICI lead the charge

In a market still reeling from the bruises of tariff tremors, the banking pack has pulled off a stunning comeback. On Monday, the Nifty Bank index smashed through its previous record and soared past the 55,000 mark for the first time, fueled by stellar Q4 results from private sector giants HDFC Bank and ICICI Bank.

The rally was led by HDFC Bank, which rose nearly 2% to a fresh 52-week high of Rs 1,950.70. ICICI Bank wasn’t far behind, rising about 1% to hit a new lifetime peak of Rs 1,436.00. Brokerages were quick to reaffirm their bullish stance on these lenders, with earnings outperformance acting as a launchpad.

Nomura, one of the loudest bulls in the room, said it remains most positive on financials given their relatively low earnings risk and attractive valuations. The brokerage noted that with the RBI having already delivered 50 basis points of policy rate cuts in 2025, and another 100 bps expected by year-end, monetary policy is clearly in easing mode.

Backing the banking momentum is a supportive liquidity environment. The RBI’s arsenal—OMO purchases, variable rate repo operations, and forex swap auctions—has swung banking system liquidity into a surplus. Credit supply has also been bolstered by the reduction in risk weights for NBFCs and microfinance institutions.

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According to Nomura, system liquidity conditions are expected to improve further, setting the stage for better deposit and credit growth, even as the Street factors in slower earnings growth due to NIM compression and rising credit costs. It added that asset quality concerns are ebbing, and banks’ willingness to lend is strengthening.

Technically, Bank Nifty’s breakout has solid legs. After rallying over 6% last week, the index etched a long bullish candle on the weekly chart, a strong indicator of upward momentum. Ajit Mishra of Religare Broking believes the index is now eyeing the 55,000–57,000 zone on the upside. He noted that the consolidation of the last nine months has built a solid base, and any dips towards the 51,900–53,400 region would likely attract strong buying interest.

Beyond the charts and earnings sheets, macro tailwinds are aligning in favour of the sector. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said FIIs are increasingly turning their focus to domestic consumption themes like financials, telecom, aviation, autos, real estate, etc, while IT may remain under pressure due to a bleak US growth outlook.