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Bank Nifty gains nearly 1% to hit new all-time high; HDFC Bank, Axis, Kotak stocks lead momentum today

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  Published in Stocks and Investing on Thursday, October 23rd 2025 at 1:54 GMT by moneycontrol.com
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Key Contributors

HDFC Bank – The leading private‑sector lender finished the session at a record high of 3,300 points, up 5 percent. HDFC’s performance was underpinned by a sharp rebound in retail lending volumes and a positive outlook on the bank’s non‑performing asset profile. The stock was the top‑gainer in the market and its momentum was a major catalyst for the Bank Nifty’s rise.

Axis Bank – Axis Bank closed at 1,200 points, up 4.5 percent. The bank’s share price benefitted from a surge in its wholesale lending and a favourable view of its capital adequacy ratio. Axis’s management reiterated its commitment to a strong growth strategy, which was well received by investors.

Kotak Mahindra Bank – Kotak finished at 1,080 points, up 4.2 percent. The stock was buoyed by a rally in the bank’s credit portfolio and a market‑wide expectation that Kotak will continue to benefit from the growing trend in corporate borrowing. Investors were also encouraged by the bank’s focus on digital initiatives and improved profitability metrics.

Other banks that added to the sector’s momentum included ICICI Bank, State Bank of India (SBI) and Bank of Baroda. While the latter two were modestly weaker, the overall positive performance of the group helped sustain the index’s climb.

Macro‑Economic Context

The rally came on the backdrop of the Reserve Bank of India’s (RBI) recent policy decisions. In its latest Monetary Policy Committee (MPC) meeting, the RBI reaffirmed that it would keep its repo rate unchanged at 6.5 percent, citing the need to support the recovery in economic activity while still containing inflationary pressures. The RBI also reiterated its focus on maintaining liquidity in the banking system, which helped quell fears that a tightening stance might dampen the banks’ performance.

In addition, the RBI’s communication emphasised its commitment to “maintaining the prudential norms” and “enhancing the banking system’s resilience.” This dovetailed with the positive sentiment observed in the stock market, as investors interpreted the RBI’s stance as a signal that the central bank will not prematurely raise rates or enforce stricter regulatory measures.

Global Market Influence

International developments also had a bearing on the banks’ performance. The US Treasury market reported a softer interest rate trajectory following the Federal Reserve’s decision to keep rates on hold, which led to a fall in global bond yields. This helped lift the pricing of fixed‑income securities, thereby improving the risk‑adjusted returns for banks’ investment portfolios. Moreover, the eurozone’s continued stability and positive outlook for European corporate earnings provided further support to the sentiment surrounding financial stocks.

Market Sentiment and Investor Behaviour

The market’s reaction to the Bank Nifty’s upward movement was largely characterised by a risk‑on stance. After a period of cautious trading following global uncertainties, investors found reassurance in the strong domestic banking performance and the RBI’s supportive policy environment. The momentum carried over into other sectors, particularly financial services and consumer staples, indicating a broader recovery in the equity markets.

Analysts noted that the sustained rally in the banking index could signal a turning point for the sector, which had struggled with high levels of non‑performing assets and cautious lending. The improved performance of HDFC Bank, Axis Bank and Kotak Mahindra Bank demonstrates that the top‑tier private banks are successfully navigating the challenges posed by a high‑inflationary environment and a tightening monetary policy.

Implications for the Broader Market

The Bank Nifty’s record climb has a number of implications for the Indian economy and the market at large:

1. Confidence in Banking Stability – The surge demonstrates that major banks are resilient to external shocks, reinforcing investor confidence in the domestic financial system.
2. Potential for Asset Rebalancing – With banks gaining on the upside, investors might shift capital from other asset classes, such as gold or real estate, into equities, thereby amplifying growth in the stock market.
3. Inflationary Expectations – A bullish banking sector may indicate that market participants expect inflation to remain manageable, thereby supporting a dovish stance from the RBI.
4. Policy‑Driven Growth – The index’s performance underscores the importance of monetary policy in shaping market dynamics, as the RBI’s rate‑keeping decision and liquidity stance provided a supportive backdrop.

Conclusion

The Bank Nifty’s near‑1 percent rise to an all‑time high marks a significant milestone for India’s banking sector. Driven by strong gains from key players such as HDFC Bank, Axis Bank and Kotak Mahindra Bank, the index’s climb reflects positive sentiment surrounding the sector’s ability to weather macro‑economic challenges. Reinforced by the RBI’s supportive stance on rates and liquidity, and buoyed by global market developments, the rally suggests that investors see the banking industry as a reliable source of growth and stability. As the economy continues to recover, the sector’s performance will likely remain a bellwether for broader market sentiment and confidence in India’s financial infrastructure.