Banking and financial stocks rallied sharply on Thursday, November 5, outperforming the broader market as investors cheered Democrats’ victory in the US midterm elections, renewed foreign investor buying and a steep decline in crude oil prices.
The election outcome raised hopes of reduced geopolitical tensions and potentially lower trade uncertainty, while Brent crude’s slide to a two-month low provided additional relief to the oil-import-dependent Indian economy.
The Nifty Financial Services index surged nearly 3% intraday, while the Nifty Bank index advanced 2.2%, outperforming the Nifty 50, which gained nearly 2%. The rally reflected improving investor appetite for financial stocks amid a broader recovery in domestic equities.
Banking, NBFC and financial stocks lead Dalal Street rally
Buying was broad-based across banking and financial stocks, with all constituents of the Nifty Bank index trading in positive territory.
Among financial stocks, SBI Cards led the gains, rising over 6%. Shriram Finance, Cholamandalam Investment and Finance Company, Bajaj Finance and HDFC AMC also advanced over 5% each. Muthoot Finance gained 4.5%, while Bajaj Finserv, ICICI Prudential Life Insurance, REC and LIC Housing Finance rose over 2% each.
Within the banking pack, AU Small Finance Bank led the Nifty Bank gainers, climbing over 4%. IndusInd Bank, Axis Bank, IDFC First Bank and ICICI Bank advanced between 3% and 4% each.
Canara Bank and HDFC Bank gained over 2% each, while Bank of Baroda, Punjab National Bank, State Bank of India and Kotak Mahindra Bank added over 1% each.
The strong performance across private banks, public sector banks, NBFCs, insurance companies and asset management businesses highlighted the breadth of the financial sector rally.
US midterm election results, falling crude oil prices lift sentiment
Democrats secured control of both chambers of the US Congress in the 2026 midterm elections, marking a significant setback for President Donald Trump and the Republican Party. The outcome will result in a divided government during the final two years of Trump’s presidency, ending two years of unified Republican control.
The Democrats’ victories give them the authority to block key elements of Trump’s legislative agenda, reject nominations, take control of congressional committees and launch investigations into his administration.
Market experts believe the outcome could improve sentiment towards emerging markets, including India, by potentially limiting aggressive trade and tariff measures. However, geopolitical risks and uncertainty over US trade policies remain important concerns.
“A shift in congressional control may limit President Donald Trump’s ability to implement aggressive trade and tariff policies, potentially easing trade uncertainty. This could improve investor sentiment towards emerging markets,” said Ravi Singh, Chief Research Officer at Master Capital Services Ltd.
Meanwhile, Brent crude prices declined sharply below $100 per barrel and were trading at $94 per barrel at the time of reporting. Lower crude prices offer relief to India by potentially easing inflationary pressures and reducing the import bill.
Foreign investors also infused around ₹17,235 crore into Indian equities in just three trading sessions of November, reflecting a return of overseas institutional buying.
Bank Nifty technical outlook: 57,200-58,000 next targets?
The sharp rally also improved the technical outlook for banking stocks. According to Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking, Bank Nifty formed a bullish candle with a higher high and a higher low, signalling a positive bias.
“Bank Nifty formed a bullish candle with a higher high and a higher low signaling positive bias. Index started the session on a strong note and gained momentum as the session progressed,” Mukherjee said.
The index closed above the 55,913 level, the 50-day exponential moving average (EMA) and the trendline resistance connecting the highs of the previous two months. This indicated strength and continuation of positive momentum.
Mukherjee expects Bank Nifty to open with a gap-up above the higher band of its four-week trading range of 54,000-56,065. Sustaining above 56,000 could signal another leg of the upmove towards 57,200 and 58,000 in the coming sessions.
He added that only a formation of a lower high and lower low on the daily chart would signal a pause in the ongoing rally.
The short-term support zone has been revised higher to 54,500-55,000, representing the confluence of the current week’s low and key retracement levels of the recent upmove from 53,626 to 55,946.
Bank Nifty intraday levels:
Resistance: 56,950 and 57,330
Support: 55,870 and 55,700
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
