The Indian bank stock index hits a record high, highlighting its safe-haven attributes amid the wave of tariffs
The Indian banking stock index reached a historic high, rising 1.9% on Monday, due to its relatively low sensitivity to tariff fluctuations. Since the U.S. announced tariffs on April 2, the index has accumulated a gain of over 7%, outperforming the Nifty 50 index. Analysts point out that the fundamentals of the Indian banking sector are robust, with HDFC and ICICI Bank's earnings reports exceeding expectations, driving stock prices to new highs. Brokerages have raised their earnings forecasts and target prices for HDFC and ICICI, and the market is optimistic about the outlook for banking stocks
According to Zhitong Finance APP, due to the limited impact of Trump's tariff policies on the Indian banking sector, which highlights its "safe-haven investment" attribute, investors continue to be optimistic about this sector, pushing the Indian bank stock index to a historical high.
On Monday, the NSE Nifty Bank Index reached an intraday increase of 1.9%, breaking the historical high set in September. Since the U.S. announced reciprocal tariffs on April 2, the index has accumulated a gain of over 7%, outperforming the benchmark NSE Nifty 50 index, which saw a gain of just over 3% during the same period.
Analysts pointed out that given the limited participation of Indian domestic enterprises in international trade, the Indian banking sector is relatively less susceptible to global tariff tensions. The fundamentals of most banks remain robust.
Sandeep Sabharwal, founder of the Mumbai research firm Asksandipsabharwal.com, stated, "The overall outlook for bank stocks is optimistic." He added that with monetary policy easing and improved liquidity, most banks not only have a considerable capital adequacy ratio but also have ample reserves, leading to increasingly favorable growth prospects.
Last weekend, India's two major banks—HDFC Bank and ICICI Bank—reported better-than-expected earnings, driving their stock prices to set new historical records. Brokerage Motilal Oswal Financial Services Ltd. raised its earnings forecast for HDFC Bank for the fiscal year 2026 by 3% and also increased the target price for ICICI Bank by 3% to INR 1,650 per share.
India's third-largest private bank, Axis Bank, will announce its earnings report on Thursday.
Currently, the implied volatility spread of the Nifty Bank Index relative to the Nifty 50 Index has returned to levels seen in early April, indicating that traders are more optimistic about the prospects of bank stocks compared to the overall market. As of Thursday's close, the number of open contracts for call options with an exercise price of INR 55,000 in April is the highest, suggesting that the bank stock index is likely to rise further
