HDFC Bank, ICICI Bank among 12 bank stocks that soared up to 28% in April. What's powering the rally?

Indian banking stocks extended their winning run to the fifth consecutive trading session on Monday, April 21, with all constituents of the Nifty Bank index trading in the green. The performance of the country’s top private sector banks — HDFC Bank and ICICI Bank — in the March quarter beat street estimates, further supporting the ongoing rally in banking stocks.

Reacting positively to the March quarter results, shares of HDFC Bank soared 2.3% to touch a fresh record high of ₹1,950 apiece, taking its April gains to 5.6%. Demand for ICICI Bank shares also further gathered momentum, with the stock rising 2.1% to an all-time high of Rs1,436 apiece, resulting in an April gain of 4.6% so far.

The upbeat performance has also prompted many brokerage firms to raise their target prices for both stocks, further boosting overall sentiment in the banking space. The positive outlook spread to other banking counters as well, with shares of IndusInd Bank jumping another 4.6% in today’s session, taking its monthly gain to 28%.

Similarly, Axis Bank shares have surged 12% in April, with 4% added in today’s trade alone. Other private sector banks, including IDFC First Bank, Kotak Mahindra Bank, and Federal Bank, have zoomed 21%, 6.37%, and 4.52%, respectively, in April so far. In line with the private banking stocks, demand for public sector banks has remained strong, with shares of State Bank of India, Bank of Baroda, Punjab National Bank, and Canara Bank gaining up to 11.5%.

The significant rally in banking stocks has also helped the Indian stock market remain buoyant, despite global pressure from ongoing trade tensions. The Nifty 50 and Sensex have extended their gains in April, rising about 3% each so far this month, after ending March with gains of up to 6%.

Nifty Bank records new milestone

While Nifty 50 and Sensex are still trading far below their record high levels, the Nifty Bank index touched a fresh peak in today’s session (April 21), crossing the 55,000 mark for the first time. The index jumped 2.2% to hit a new all-time high of 55,461 points, contributing to a nearly 8% gain in April so far and emerging as one of the best-performing sectoral indices.

From its February low of 48,078, the index has surged 7,302 points, or 15.3%, outperforming both the Nifty 50 and Sensex, which have gained up to 10% during the same period.

The index concluded the previous holiday-shortened week with a gain of 6.4% after India’s retail inflation eased to a multi-year low, which boosted the investor sentiment on expectations of another rate cut by the Reserve Bank of India.

Analysts now project a pickup in credit growth within the financial system, driven by back-to-back RBI rate cuts and the increase in the income tax exemption limit to ₹12 lakh in the Union Budget 2025–26.

Domestic rating agency Crisil on Tuesday estimated that bank credit growth will accelerate to up to 13% in FY26 from 11% in FY25. This growth is expected to be supported by recent regulatory measures, a boost to consumption from tax cuts, and a softer interest rate environment.

However, the agency cautioned that deposit growth "bears watching." It also noted that ongoing global tariff wars could make companies more cautious about borrowing.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.