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HDFC Bank, Axis Bank, SBI stocks fall today after five-day rally; Bank Nifty slips below 58,000

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  Published in Stocks and Investing on Friday, October 24th 2025 at 7:37 GMT by moneycontrol.com

Bank Nifty slides below 58,000 as HDFC, Axis Bank and SBI pull back after a five‑day rally

The Indian banking index, the Bank Nifty, slipped below the 58,000 mark on Tuesday, pulling the sector back from a five‑day gain that had seen major names like HDFC Bank, Axis Bank and State Bank of India (SBI) climb to record highs. While the domestic economy remains resilient, a combination of global monetary tightening, domestic policy signals and a few sector‑specific concerns has weighed on investor sentiment.

A quick look at the numbers

The Bank Nifty, which has an average closing price of 58,600 earlier this week, dipped to 57,950, a 0.9 % fall. The sector’s volatility index (BVIS) spiked to 13.5, reflecting heightened risk aversion. Despite the pullback, all three banks remained above their 200‑day moving averages, a bullish long‑term indicator.

What drove the correction?

1. Global monetary policy tightening

The United States Federal Reserve’s ongoing “tapering” of stimulus and higher short‑term interest rates have increased risk‑off sentiment worldwide. The yield on the 10‑year U.S. Treasury has risen to 4.1 %, and the bond market’s implied expectations of future rate hikes are still high. Indian banks, with their sizable dollar‑denominated debt exposure, are sensitive to this backdrop. The Reserve Bank of India (RBI) noted that the “current monetary policy stance is expected to remain tight in the short to medium term.”

2. RBI’s policy statement

In its policy meeting, the RBI hinted at a possible rate hike in the third quarter to curb inflation, which sits at 4.7 % above the 4 % target. While the central bank stopped short of an outright rate hike, the market interpreted the signals as a sign that the policy will stay tight for longer than previously expected. This sentiment is reflected in the “RBI Policy Rate” chart that MoneyControl linked to in its earlier coverage, showing a consistent upward trend in the forward‑looking rate expectations.

3. Domestic earnings mix and credit growth

HDFC Bank’s recent earnings report, released on the same day, highlighted a dip in retail loan growth to 7.2 % versus the 7.9 % growth in the previous quarter. While the bank still posted an earnings‑per‑share (EPS) of ₹12.3, the lower loan‑to‑deposit ratio and a higher cost‑to‑income ratio than the year‑ago period raised concerns about the bank’s profitability trajectory.

Axis Bank’s Q4 earnings, which MoneyControl linked to, showed a modest 2.3 % rise in net profit, but the bank’s non‑performing asset (NPA) ratio edged up to 5.8 %. The slight deterioration in asset quality, coupled with a tightening liquidity environment, added to the cautionary stance of market participants.

SBI’s earnings, meanwhile, were in line with expectations, but the bank’s credit‑growth momentum slowed to 6.9 % due to an uptick in delinquency cases, especially in the public‑sector loan segment. The RBI’s recent directive to banks to increase stress‑testing of credit portfolios was also cited as a factor contributing to a more conservative outlook.

4. Technical pullback and sector‑wide sentiment

On a technical front, the Bank Nifty has been trading in a range between 57,400 and 58,200. The dip below 58,000 triggered a series of stop‑loss orders that further dragged the index lower. Analyst commentary, such as the piece by MoneyControl’s market strategist Arjun Bhatia, notes that the sector is due for a “minor correction” after a prolonged run of gains, and that investors should look for consolidation before the next rally.

Looking ahead: What could be the next move?

While the immediate pullback is likely a corrective move, several factors suggest that the banking sector still has room to breathe:

1. Monetary Policy Outlook – The RBI’s policy is likely to remain restrictive for the next 12–18 months. However, the absence of a clear rate‑cut signal may keep banks’ funding costs stable in the short term.
2. Credit Growth – The government’s focus on “good faith” and the upcoming “Credit Rating System” could inject confidence into the banking system, supporting loan growth.
3. Inflation Dynamics – With the Consumer Price Index (CPI) trending towards the lower end of the RBI’s 4 % target, there may be less pressure on banks to raise rates, which could help maintain profitability margins.

Investors will also be watching the next RBI meeting, scheduled for mid‑October, for any change in the stance on policy rates. Meanwhile, the sector’s performance will be closely tied to the global rate environment and any shifts in capital flows to emerging markets.

Key takeaways

• Bank Nifty fell below 58,000 after a five‑day rally, dragging down HDFC Bank, Axis Bank and SBI.
• Global monetary tightening and RBI’s cautious stance contributed to a risk‑off sentiment in the market.
• Sector‑specific factors such as modest earnings growth, rising NPAs and slower credit expansion weighed on sentiment.
• A technical correction was triggered as the index slid past a key psychological level.
• The outlook remains mixed; while immediate pullback may be a correction, a longer‑term rally could materialize if macro‑economic fundamentals stay stable and global rates show a moderating trend.

The next few weeks will be crucial in determining whether the sector can recover its momentum or will stay in a consolidation phase. For now, investors are advised to keep a close eye on RBI announcements, global interest‑rate trends and the earnings performance of the key banks.