Kolkata: The financial services sector is putting up a stellar performance in the Indian stock exchanges in the first half (January-June) period of this calendar year. The Nifty Financial Services Index mirrored this buoyancy, rising about 16% YTD (year-to-date). This sector has outperformed other sectors. The Nifty Financial Services Index zoomed to a record high of 27,249 in intra-day on June 26, which registered a 22% jump from its 52-week low of 22,320.85 points. The surge comes against the backdrop of falling crude oil prices, continuing uneasy ceasefire between Israel and Iran and a weakening Dollar and FPI investment in Indian markets.
The market optimism was underscored by the steady support from domestic institutional investors. Another stream of wind under the markets wings has been revival in corporate earnings in Q1 (April-June) of FY26, with banking, insurance and diversified financials putting up an impressive show. From different perspectives, the Nifty Financial Services Index has turned out a sparkling performance. It has surged 14% in the past one year — the last four months having witnessed consistent rising momentum. In June itself, it gained 2.7%, while the gains in May was 1.5%. The rise of the index was 4% in April and 9% in March. These performances erased the decline in January and February, when it declined by nearly 1% each month.
Top performing stocks
As many as 20 stocks constitute the Nifty Financial Services Index. Of these as many as 17 were in the green in the January-June period. The biggest rise was registered by SBI Cards. It jumped 47.5%. The second spot belonged to MCX, which rose 41% in the first half. In this basket, the other prominent gainers were Bajaj Finance, Bajaj Finserv, Cholamandalam Investment and Finance Company, and SBI Life, each of which delivered gains of over 30%. Stocks that jumped 20-30% included Kotak Mahindra Bank, Shriram Finance, Muthoot Finance, HDFC Life and HDFC Asset Management.
The worst performing stock in this basket was REC, which crashed about 20%. The next big laggard was PFC, that dropped 6.6% and the third spot in the red belonged to ICICI Prudential Life Insurance. It inched down by a shade over 1%.
RBI guidelines
One of the tailwinds to facilitate the financial services sector was the RBI’s final guidelines on project finance. Relaxation in provisioning norms for under-construction loans, proved to be a significant facilitator, said Motilal Oswal Financial Services (MOSL). MOSL highlighted the comfort level by indicating that the revised standard asset provisioning now stands at around 1–1.25% which is down a long way from 5% proposed initially. MOSL also stated that major companies such as Bajaj Housing Finance, LIC Housing Finance, Piramal Enterprises, and L&T Finance can encounter higher provisioning from October this year but the same could be passed on to borrowers.
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