Banking stocks in focus: Shares of HDFC Bank, Axis Bank, Kotak Mahindra Bank, and ICICI Bank, the four largest private sector banks in India, have seen steady gains over the past six months. Though these stocks were impacted by rising market volatility, they quickly rebounded, supported by the RBI’s ongoing efforts to boost credit demand in the system, coupled with the return of overseas investors.
Among the top private sector banks, HDFC Bank led in absolute market capitalisation gains, adding ₹1.75 lakh crore, as its shares rose 12% in the first half of 2025 and also touched ₹2,027″>a fresh all-time high of ₹2,027. Notably, this marks the 12th consecutive year of gains for the stock.
ICICI Bank followed, with the stock hitting a new all-time high of ₹1,471.60 in June. It gained 11.3% in the first six months, adding ₹1.17 lakh crore to its market cap, and the rally also marked the fifth consecutive year of gains for ICICI Bank.
Kotak Mahindra Bank led in percentage gains, with its share price rising 20% between January and June 2025, pushing its market capitalisation higher by ₹77,000 crore. Meanwhile, Axis Bank saw a 10% rise in its stock price during the first six months of 2025, contributing ₹42,000 crore to its overall market capitalisation.
This rally led to a combined market capitalisation increase of ₹4.11 lakh crore, likely benefiting overseas investors the most, as they hold majority stakes in these banks, averaging around 40% as of the March 2025 quarter. Overall, the total market capitalisation of all four banks stood at ₹33.3 lakh crore as of July 04.
Banking stocks end last four months in green, first such streak in 2 years
Amid strong performance from private banks and small finance banks, the Nifty Bank ended the last four months in the green, posting an 18.5% gain. The rally also marked the index’s longest sustained winning streak in the past four years.
After remaining under pressure for a considerable period, banking stocks began their rebound in March, following the RBI’s first rate cut in five years during its February meeting and introduced further liquidity-easing measures in the following months, including a recent 50 basis point cut in the repo rate and a 100 basis point cut in the CRR, aimed at boosting credit demand in the economy, which has remained subdued in recent quarters.
Tight liquidity conditions had also put pressure on bank margins, with aggregate net profit for banks growing in single digits year-on-year in the March 2025 quarter, the first time in four years (or 17 quarters).
That had initially dampened investor sentiment, but expectations have since shifted, as the central bank’s active steps to inject additional liquidity into the banking system beginning in September, which also raised hopes that margin pressures will ease in the coming quarters and support banks’ bottom-line profits.
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