1 week Ago
The Indian banking and financial services sector in 2025 have presented a mixed bag of performance, with leading NBFCs and private financial institutions delivered impressive returns, while major public sector banks and select financial services firms have significantly underperformed. Data from ACE Equity shows Bajaj Finance is the top performer in finance and banking space with a robust 29% YTD return till April 8, 2025, pushing its market capitalisation from Rs 4.23 lakh crore at the end of 2024 to Rs 5.
49 lakh crore. Other top performers include SBI Cards (27%), Aavas Financiers (24%), and Cholamandalam Investment & Finance Company (23%), all of which have gained from solid loan growth and prudent asset management. Mid-tier NBFCs like Manappuram Finance (22%) and Poonawalla Fincorp (13%) also posted positive returns.
On the other hand, Punjab & Sind Bank fell 45%, and other PSU banks like Central Bank of India, UCO Bank, and Indian Overseas Bank dropped over 30% YTD. This trend reflects growing investor caution around state-run banks. Besides, even well-known names in financial services like Motilal Oswal (-38%) and JM Financial (-29%) were not spared amid subdued market sentiment in capital markets.
Private banks also showed mixed performance—Kotak Mahindra Bank rose 15%, while IndusInd Bank declined 29%, highlighting stock-specific drivers within the space. Investor sentiment received a boost with the RBI’s recent policy decision. As Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS, noted: The RBI’s decision to cut rates by another 25bps was largely on expected lines.
It also changed its stance from neutral to accommodating. This paves the way for further rate cuts in the upcoming meetings. With inflation cooling off, the regulator has revised its inflation forecast for FY26 downwards to 4% vs 4.
2% earlier. However, amidst global challenges, the GDP growth rate has also been tweaked downwards to 6.5% compared to 6.
7% earlier. He added, “During the rate easing cycle, a general trend emerges improved CASA ratios for banks..
. We expect the transmission on the CoF side to be slower vs the pace of transmission on the yields..
. We believe NBFCs like Bajaj Finance, Shriram Finance, SBI Cards and Cholamandalam Inv. & Fin.
would benefit not only from the rate cuts but also from the RBI’s decision to roll back the higher risk weight on bank loans to NBFCs. Amongst banks, we prefer large private banks like HDFC Bank, Kotak Bank and ICICI Bank”, Kulkarni said..
