Bank Nifty Soars To Record High, Jumps Over 1% On Rate-Cut Optimism; PSU Banks Lead Rally

Bank Nifty At Record High: The Bank Nifty rallied sharply in early trade on Wednesday, climbing nearly 700 points to cross 59,500 around 10:50 am. The index was up 1.2 per cent for the session and has

now gained 16.5 per cent in 2025, handily outperforming the Nifty 50’s 9.7 per cent year-to-date rise.

The upmove was broad-based, with all 12 Bank Nifty constituents trading in the green. PSU lenders led the charge: Canara Bank jumped 2.2 per cent to Rs 151.95, while Punjab National Bank rose 2 per cent to Rs 125.53. Among private lenders, Axis Bank and IndusInd Bank gained 2 per cent and 1.9 per cent, rising to Rs 1,291.8 and Rs 856.05, respectively. Bank of Baroda added 1.5 per cent to Rs 291.6.

Rate-Cut Optimism

Sentiment was further boosted by supportive remarks from Reserve Bank of India Governor Sanjay Malhotra, who reiterated earlier this week that there remains scope to reduce policy interest rates.

RBI Governor Sanjay Malhotra, in a televised interview, said the RBI’s October policy statement had “clearly communicated” that there is room for rate cuts, and that incoming macroeconomic data has not diminished this scope. “There is certainly room (to lower rates), but whether the MPC takes a call on that in the coming meeting depends on the committee,” he noted.

His comments come days ahead of the next Monetary Policy Committee meeting, which begins on December 3, with a decision due on December 5. The MPC has already lowered the repo rate by a cumulative 100 basis points in the first half of 2025, followed by pauses in the August and October reviews.

PSU Banks Strengthen Grip on Home Loan Market

Public sector banks have further tightened their hold on the competitive home-loan segment, capturing 50 per cent of total originations by value in September, according to a Crif High Mark report quoted by PTI. This marks a significant lead over private-sector banks.

“PSU banks have expanded their market leadership in both value and reach, and regulatory discipline is encouraging more responsible and broad-based financial inclusion across geographies and population segments,” said Sachin Seth, Chairman of Crif High Mark.

The report also flagged an improvement in asset quality, with consumption loans overdue for 31–180 days easing to 3 per cent in September from 3.1 per cent in June and 3.3 per cent a year earlier.

Private Banks Likely to Lose Market Share Again in FY26

A separate media report highlighted that private-sector banks are on track to lose credit market share for a second consecutive year in FY26, as their loan growth—8.9 per cent in FY25 and 9.9 per cent in the first half of FY26—lags the overall banking system’s 11–12 per cent expansion.

Over the past few years, large private banks have underperformed their state-owned peers amid concerns over unsecured lending stress and slower earnings growth, analysts at InCred Equities noted.

Broader Market Rally Lifts Indices

Indian equities surged in Wednesday’s trade, supported by upbeat global cues and expectations of a US Federal Reserve rate cut in December. Softer U.S. consumer confidence and retail sales data signalled cooling demand, strengthening market conviction that the Fed may ease policy despite Chair Jerome Powell’s caution last month.

The Sensex jumped 744 points, or 0.9 per cent, to 85,331, while the Nifty climbed 234 points to 26,119.

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