Nifty Bank hits record high, tops 57,000 as RBI-led rally in bank stocks extends to second day

Stock market today: The Indian stock market extended its winning streak to the second straight session on Monday, June 9, largely led by financials, as investors turned their focus to the sector after the Rerserve Bank of India (RBI) delivered a deeper-than-expected 50 basis point cut in the repo rate and an unexpected 100 basis point cut in the CRR last week, lifting expectations that both surprise moves will help the credit recovery in the economy and a rebound in banks’ earnings.

Amid this, all 12 constituents of the Nifty Bank index opened in the green, with stocks such as IDFC First Bank, Kotak Mahindra Bank, and Axis Bank gaining as much as 3%, pushing the index past the 57,000 mark for the first time to reach 57,049, up nearly 1%, and building on Friday’s solid 1.50% gain.

The Indian central bank has been taking a series of steps to boost liquidity in the system, with the latest repo and CRR cuts adding to the ongoing easing measures. The RBI has infused over ₹7 lakh crore into the banking system through OMO purchases in the last five months.

It has been injecting funds since mid-January to counter a sharp decline in liquidity, which helped the banking system swing back into surplus from April. Meanwhile, bank credit growth moderated to 12% year-on-year in March 2025, sharply lower than the 16.3% expansion recorded in the same period a year ago, according to the latest data from the Reserve Bank of India (RBI). 

Mid-sized banks and NBFCs seen as key gainers

Following the RBI’s deeper-than-expected 50 basis point cut in the repo rate and a surprise 100 basis point reduction in the CRR, global brokerages have turned incrementally positive on the Indian banking sector, particularly mid-sized private banks and select NBFCs.

Nomura and UBS flagged that banks such as AU Small Finance Bank, IndusInd Bank, and IDFC First Bank stand to gain the most from improved liquidity conditions, while large banks like HDFC Bank and Axis Bank could also benefit, especially those facing deposit growth constraints.

Jefferies sees potential upside in NIMs for fixed-rate lenders such as Mahindra Finance, Chola Finance, and SBI Cards, naming Bajaj Finance, Chola, and Shriram Housing Finance among top picks.

Bernstein believes the announcements tilt more favourably towards banks over NBFCs, while Citi expects durable liquidity to aid sentiment for large private lenders.

IIFL and Goldman Sachs highlighted the CRR cut’s likely positive impact on NIMs, ROAs, and bottom lines, estimating a liquidity infusion of ₹2.5 trillion. While the frontloading of rate cuts signals concern over growth, analysts remain confident that the move enhances earnings visibility for the sector, particularly for mid-tier banks in FY26.

"Frontloading of monetary easing implies nervousness regarding the GDP growth. While the expectation is that banks flush with more liquidity will want to lend more, we think that banking system loan growth at 9.8% yoy is unlikely to meaningfully accelerate (large corporates tapping capital markets vs. banks, slowdown in home loan growth. We expect the banking system to have loan growth of 11-11.5% in FY26," said IIFL.

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.