The Bank Nifty index closed 3% higher at 56,817.40 points, with all 14 constituents trading firmly in the green during Friday's session. According to latest reports from Moneycontrol, the banking rally was broad-based and came as investors cheered signs of a possible breakthrough in the US-Iran conflict. The strong gains were supported by easing geopolitical tensions and a sharp decline in crude oil prices, which boosted investor sentiment across emerging markets. The Nifty Bank index outperformed the benchmark Nifty 50, which gained 1.90%, while the Nifty Private Bank index advanced 2.86% and the Nifty PSU Bank index rose 2.60%, placing banking among the best-performing sectors of the day.
AU Small Finance Bank led the gains with a 5.5% surge to ₹1,016, followed by IDFC First Bank which gained 4.2%. Among heavyweight lenders, HDFC Bank rose 3.7% and emerged among the top contributors to Nifty gains, while Yes Bank climbed 3.5%, Punjab National Bank gained 3.4%, Canara Bank advanced 3.3%, and IndusInd Bank rose 3.3%. Among other major lenders, Union Bank of India gained 3%, Axis Bank advanced 2.8% and featured among the top Nifty gainers, while Bank of Baroda rose 2.5%. Kotak Mahindra Bank gained 2.4%, Federal Bank advanced 2%, ICICI Bank added 1.8%, and State Bank of India rose 1.5%.
The broader market demonstrated robust participation with the Nifty Midcap 100 gaining 2.2% and the Nifty Smallcap 100 rising 2.7%, reflecting improved sentiment across market capitalisations. The Nifty Bank index was up 2.97% at 56,817.40, outperforming the benchmark Nifty 50. The Nifty Private Bank index advanced 2.86%, while the Nifty PSU Bank index rose 2.60%. The NSE's India VIX, a gauge of market volatility, declined 4.6%, indicating easing volatility and improved risk appetite. The rally was supported by a steep decline in crude oil prices, with Brent crude falling around 5% to about $86.4 per barrel, hovering near a two-month low.
The Nifty PSU Bank index has demonstrated exceptional long-term performance, gaining 18.00% over the past year compared to the 7.41% decline recorded by the benchmark Nifty 50 index. According to Business Standard, this significant outperformance highlights the relative strength of PSU banking stocks in the current market environment. The strong performance reflects improving asset quality, attractive valuations, stronger domestic ownership and supportive regulatory measures that have enhanced the appeal of PSU banks.
From a technical perspective, the rally has taken Bank Nifty decisively above the 55,800-56,000 resistance zone highlighted by analysts earlier in the day. According to Ponmudi R, CEO of Enrich Money, a sustained breakout above this band could strengthen bullish momentum and pave the way for a move towards the 56,500-56,800 region. With the index trading around 56,817 in afternoon deals, Bank Nifty has already crossed the upper end of that target range, signalling a significant improvement in near-term sentiment. On the downside, analysts continue to view the 55,000-54,800 region as a key support zone that needs to hold to preserve the ongoing recovery structure.
