India’s Bank Gauge Hits Record High on Low Tariff Exposure

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A gauge of Indian lenders’ shares rose to a record, as investors remain bullish on the sector due to its relative insulation to the tariff-related turmoil. 

The NSE Nifty Bank Index advanced as much as 1.9% on Monday, pushing the measure past the previous record set in September. The gauge has gained more than 7% since April 2, when US reciprocal tariffs were announced, outperforming the benchmark NSE Nifty 50 Index’s more than 3% climb. 

Banks in India are seen to be relatively shielded from the risk of global tariff tensions given local firms’ limited exposure to international trade. Fundamentals for most lenders also remain robust, according to analysts. 

“Overall outlook for banking stocks is positive,” said Sandip Sabharwal, founder of research house Asksandipsabharwal.com in Mumbai. Most banks have significant capital adequacy ratios, good additional provisions as buffers as well as accelerating growth prospects as monetary policy eases and liquidity improves, he added.

Shares of HDFC Bank Ltd. and ICICI Bank Ltd. hit a fresh record after both banks announced better-than-expected results over the weekend. Brokerage Motilal Oswal Financial Services Ltd. raised earnings estimates on HDFC Bank by 3% for FY26, and revised its price target on ICICI Bank 3% higher to 1,650 rupees.

India’s third largest private bank, Axis Bank Ltd. is due to announce results on Thursday. 

The implied volatility spread for the Nifty Bank Index compared to the Nifty 50 Index has fallen to levels seen in early April, suggesting traders are more optimistic on banking stocks than shares in the broader index. The April 55,000-rupee calls held the most open interest as of Thursday close pointing to additional upside for the bank gauge. 

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