Canara Bank, SBI, HDFC Bank: Banking stocks zoom in 7 days; NIFTY PSU Bank jumps 9%, BANK NIFTY surges over 7%; what you need to know

According to experts, the Indian market is rising now as the valuations have become favourable.

On Monday, the domestic equity market reversed this year's losses as both benchmark indices, SENSEX and NIFTY50, extended their winning momentum to the sixth day in a row.

Return of foreign investors after a prolonged period of selling, bargain hunting at lower levels, better valuations and the US Fed signalling two rate cuts in 2025 have boosted investor sentiment, experts said.

Early signs of a recovery are visible with global banks, including Citigroup Inc., signalling that the selloff since last September has eased concern around the market’s expensive valuation. The central bank’s liquidity infusion and rate cut in the last meeting also drove optimism, according to a report by Bloomberg.

Further, Sonam Srivastava, founder of Wright Research, said, “Confidence is coming back. We are seeing a convincing recovery in various stocks, and this rally seems to have legs."

Srivastava added that there is an expectation of earnings bottoming out.

The 30-share BSE benchmark SENSEX has jumped 4,155.47 points, or 5.62%, in six days since March 17. The NSE NIFTY50 has zoomed 1,261.15 points, or 5.63%, during this period.

So far in March, the BSE benchmark surged 4,786.28 points or 6.53%. (as of Monday's close).

That said, almost all the sectors have participated in the sharp recovery. One sector that has grabbed the limelight is banking.

Data show that the BANK NIFTY index has rallied 7.22% in the past seven days or 1 week (March 17 - March 24), while the NIFTY PSU BANK index has jumped 8.9% during the window.

Further, the Nifty Private Bank index has advanced 7.5% from the 24,030.80 levels hit on March 17 (closing basis) to 25,842.85 levels (March 24 closing), Trendlyne data showed.

HDFC Bank shares ended at ₹1,802.80, up 1.83% on the NSE, while SBI ended 3.69% higher at ₹781.

India's financial system resilient and diverse: IMF

The Indian financial system has become more resilient and diverse, driven by rapid economic growth and withstood the pandemic well, according to an IMF report.

The Financial Sector Assessment Program (FSAP), a joint programme of the International Monetary Fund (IMF) and the World Bank (WB), undertakes a comprehensive and in-depth analysis of a country's financial sector.

IMF has released the latest India-FSSA report, based on the assessment carried out during 2024, while WB's Financial Sector Assessment (FSA) report is due for publication.

"India welcomes the assessment of the Indian financial system undertaken by the joint IMF-World Bank team conforming to the highest international standards," the Reserve Bank said in a release on Monday.

The IMF report said that since the last FSAP in 2017, India's financial system has become more resilient and diverse, driven by rapid economic growth, PTI reported on Monday, March 24.

Moody's projects stable outlook for banking sector

Earlier this month, Moody's Ratings, the global rating agency, projected a stable outlook for the banking sector. However, Moody's added that although the operating environment of Indian banks will remain favourable in the next fiscal year, their asset quality will deteriorate moderately after substantial improvements in recent years, with some stress in unsecured retail loans, microfinance loans, and small business loans.

RBI says Indian banking system remains strong

According to a report by Business Standard dated March 16, 2025, the RBI said that India’s financial institutions remain resilient, well-capitalised, and robust under the strict regulatory oversight of the central bank, ensuring the stability of the system.

Recent speculation regarding IndusInd Bank has led to some unwarranted speculation among depositors about the health of the above bank. However, a closer look at the fundamentals of the lender and Indian banking system makes it clear that there is no reason for any alarm, RBI added.

The RBI’s periodic stress tests further reinforce the strength of the sector, ensuring that banks can withstand economic shocks effectively, the report added.

Public sector bank dividends rise 33% in FY24

Dividend payouts by public sector banks (PSBs) have risen by 33% to ₹27,830 crore in FY24, indicating significant improvement in the financial health of these lenders.

PSBs declared a dividend of ₹27,830 crore to shareholders in 2023-24 as against ₹20,964 crore in the previous fiscal, registering an increase of 32.7%, according to government data.

It is to be noted that 12 public sector banks recorded the highest ever aggregate net profit of ₹1.41 lakh crore in 2023-24 against the net profit of ₹1.05 lakh crore in 2022-23 and earned ₹1.29 lakh crore in the nine months of the current financial year.

Out of the total profit of ₹1,41,203 crore earned during FY24, market leader SBI alone contributed over 40%, as per the published numbers on exchanges.