Private banks poised for a rally? Experts bullish on these banking heavyweights

As stock market sentiment improves with a decline in crude oil prices, recovery in the Indian rupee, and sporadic buying by FPIs, experts say large private banks could outperform in the near term due to healthy Q1 numbers and value buying by institutional investors.

Most private bank stocks have delivered healthy gains this year so far, defying weak market sentiment due to geopolitical and geoeconomic shocks, foreign capital exodus, and weak earnings-high valuation mismatch.

Till 8 July in Calendar 2026, the Nifty Private Bank index has declined 4% compared to a 5% fall in the Nifty Bank and an almost 9% fall in the benchmark Nifty 50.

Stocks such as Bandhan Bank (up 34%), Federal Bank (up 22%), IndusInd Bank (up 15%), and RBL Bank (up 14%) have gained strongly so far this year.

Out of 10 stocks in the Nifty Private Bank, seven are in the green this year so far, while only three- HDFC Bank (down 18%), Kotak Mahindra Bank (down 16%), and IDFC First Bank (down 9%) - have lost.

Private banking majors are seeing recovery after the phase of underperformance and are likely to improve further based on the earnings.

Ravi Singh, Chief Research Officer at Master Capital Services, believes private sector banks may be better placed than their PSU peers at the current juncture, supported by healthy asset quality, stable credit growth and strong capital positions.

Singh underscored that recent business updates from leading lenders have further reinforced confidence, with HDFC Bank reporting healthy growth in both advances and deposits, while ICICI Bank continues to deliver consistent operational performance.

Easing funding costs and improving liquidity conditions are also expected to support margins going forward.

Singh said that while PSU banks have delivered a strong rally over the past two years, valuations in several private banks remain relatively attractive.

Technical experts also exhibit positive views on the private banking stocks.

Om Mehra, a technical research analyst at SAMCO Securities, highlighted that the Nifty Private Bank index has been building a fresh uptrend since the April lows near 24,050, a sharp V-shaped recovery and is now trading above its entire moving average ribbon (50/100/200 DMA), which is the cleanest sign of trend alignment.

Mehra added that RSI at 66-67 shows strength, and MACD has been in a bullish crossover with an expanding histogram since mid-June. He said the index has a resistance at 29,000; a decisive close above that would confirm the next leg up.

"Private banks are showing exactly what PSU banks lack at this juncture: fresh breakout momentum with volume confirmation. So, private banks are better placed right now with relative momentum and cleaner chart structure," said Mehra.

According to Ajit Mishra, SVP of Research at Religare Broking, market participants should look for selective buying opportunities in both public and private banks.