As stock market sentiment improves with a decline in crude oil prices, recovery in the Indian rupee, and sporadic buying by FPIs, experts say large private banks could outperform in the near term due to healthy Q1 numbers and value buying by institutional investors.
Most private bank stocks have delivered healthy gains this year so far, defying weak market sentiment due to geopolitical and geoeconomic shocks, foreign capital exodus, and weak earnings-high valuation mismatch.
Till 8 July in Calendar 2026, the Nifty Private Bank index has declined 4% compared to a 5% fall in the Nifty Bank and an almost 9% fall in the benchmark Nifty 50.
Stocks such as Bandhan Bank (up 34%), Federal Bank (up 22%), IndusInd Bank (up 15%), and RBL Bank (up 14%) have gained strongly so far this year.
Out of 10 stocks in the Nifty Private Bank, seven are in the green this year so far, while only three- HDFC Bank (down 18%), Kotak Mahindra Bank (down 16%), and IDFC First Bank (down 9%) – have lost.
Are private bank stocks worth buying at this juncture?
Experts stay positive
Private banking majors are seeing recovery after the phase of underperformance and are likely to improve further based on the earnings.
Ravi Singh, Chief Research Officer at Master Capital Services, believes private sector banks may be better placed than their PSU peers at the current juncture, supported by healthy asset quality, stable credit growth and strong capital positions.
Singh underscored that recent business updates from leading lenders have further reinforced confidence, with HDFC Bank reporting healthy growth in both advances and deposits, while ICICI Bank continues to deliver consistent operational performance.
Easing funding costs and improving liquidity conditions are also expected to support margins going forward.
Singh said that while PSU banks have delivered a strong rally over the past two years, valuations in several private banks remain relatively attractive.
Technical experts also exhibit positive views on the private banking stocks.
Om Mehra, a technical research analyst at SAMCO Securities, highlighted that the Nifty Private Bank index has been building a fresh uptrend since the April lows near 24,050, a sharp V-shaped recovery and is now trading above its entire moving average ribbon (50/100/200 DMA), which is the cleanest sign of trend alignment.
Mehra added that RSI at 66-67 shows strength, and MACD has been in a bullish crossover with an expanding histogram since mid-June. He said the index has a resistance at 29,000; a decisive close above that would confirm the next leg up.
“Private banks are showing exactly what PSU banks lack at this juncture: fresh breakout momentum with volume confirmation. So, private banks are better placed right now with relative momentum and cleaner chart structure,” said Mehra.
Banking stocks to buy
According to Ajit Mishra, SVP of Research at Religare Broking, market participants should look for selective buying opportunities in both public and private banks.
“Among the private banking pack, ICICI Bank and IndusInd Bank are looking promising for the short term, while SBI and Union Bank are holding firm in the PSU banking segment,” said Mishra.
Singh recommends HDFC Bank and ICICI Bank due to their consistent execution and earnings visibility. Investors with a higher risk appetite can also consider Axis Bank for its improving growth outlook and attractive valuation, said Singh.
According to Mehra, IndusInd Bank and HDFC Bank are the two names standing out.
“IndusInd’s breakout above the ₹950-960 zone opens room toward its next resistance band near ₹1,040-1,060, with ₹950-960 now turning into fresh support; dips toward that zone can be used to accumulate. HDFC Bank’s breakout above ₹815 puts the stock on track toward ₹860-870 in the near term, with ₹805 acting as the immediate support to watch,” said Mehra.
“Both stocks are showing RSI in the 70-73 band, which reflects strength rather than exhaustion at this stage, especially coming straight off a base,” Mehra said.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
