The Nifty Bank index surged to yet another all-time high during Thursday’s trading session, extending its winning run to a third straight day as overall market sentiment remained positive. The index climbed 0.2% to touch a new peak of 59,897.50, placing it more than 25% above its 52-week low of 47,702.9 recorded in March 2025. Over the past three sessions alone, it has gained 2%, reflecting strong momentum in the banking sector.

On a one-year basis, Nifty Bank has significantly outperformed the broader market. The index has risen over 15% in the last 12 months, beating the Nifty 50’s 9.5% gain. Short-term performance has also been robust, with gains of 8% in six months, 11% in three months, and 3% over the past month.

Among its constituents, all banks except IndusInd Bank posted gains over the past year. AU Small Finance Bank led the pack with a strong 64% rise, followed by Canara Bank (49%), IDFC First Bank (25%), Federal Bank (22%), and Kotak Mahindra Bank (20%).

Sector Outlook Strengthens with Healthy Credit Growth and Stable NIMs

Industry analysts expect the second half of FY26 to be even stronger for Indian banks, supported by improving macro conditions, easing funding costs, and resilient asset quality.

CareEdge Ratings forecasts 11.5%–12.5% year-on-year credit growth in FY26, driven primarily by retail and MSME lending. Corporate loan demand is also expected to pick up as borrowers shift from bond markets to bank financing.

However, the agency highlighted that deposit growth continues to lag behind credit growth, keeping the credit-to-deposit ratio elevated at around 80%. Even so, funding costs are likely to ease with improved liquidity and stable interest rates, helping net interest margins stabilise.

Asset quality is expected to remain strong, with lower slippages, higher recoveries, and steady write-offs providing additional support to the sector.

Overall, improving consumption patterns, stable margins, and healthy asset quality continue to strengthen institutional confidence in banking stocks.

Analysts Expect Nifty Bank to Cross 60,000 by December

Technical indicators also point to continued strength. Analysts believe the index is poised to break the psychological 60,000 level before the end of the year.

Amruta Shinde, Research Analyst at Choice Broking, noted that a decisive close above 59,300 would confirm renewed bullish momentum, potentially driving the index toward 59,400–59,500. She also cautioned that a decline below 58,575 could trigger a deeper correction toward the 58,000–57,645 range.

Om Ghawalkar, Market Analyst at Share.Market, echoed the bullish sentiment, stating that the index’s breakout reflects a strong technical uptrend. According to him, the recent high may act as a new support, and Nifty Bank is well-positioned to move above 60,000 by year-end, backed by improving asset quality, strong credit growth, and leadership from heavyweight banks.

Analysts recommend traders remain selective, focusing on fundamentally sound and technically strong banking stocks rather than aggressively chasing prices.