At record height! Nifty Financial Services emerges as the best performance sector in H1 2025, with almost 16% | Einsmark news

The Indian financial services sector stood high in the first half of 2025, and emerged as the best achievement in the broader market segments. The Nifty Financial Services index has risen almost 16 percent to date (YTD), exceeding other sectoral counterparts and highlighting investor confidence in the sector’s robust principles and improving the macroeconomic background. The index touched its record high of 27,249 today, reflecting a sharp 22 percent rally from its 52-week low of 22,320.85. With a 1.5 percent profit in the most recent session, the momentum remains strong as the broader market sentiment benefits from the relief of geopolitical risks, falling prices of crude oil and a weakened US dollar index, all of which encourage foreign portfolio inflows in Indian stocks. Domestic Institutional Investors (DIIs) were also steadfast in their support, which contributed the rally. Market optimism is further fueled by the hope of a healthy revival in corporate earnings in the June term of FY26, especially in sectors such as banking, insurance and diversified finances. Over the past one year, the Nifty Financial Services index jumped by 14 percent, with a sustained upward momentum seen over the past four months. That added 2.7 percent in June, after the 1.5 percent profit in May, 4 percent in April and 9 percent in March. The index saw some moderation early in the year, which fell by almost 1 percent in January and February. The top performers in Nifty Fin Services among the 20 ingredients of the Nifty Financial Services Index, only three shares were in the red during H1 2025. The guidance of the charge was SBI cards, which sustained a strong 47.5 percent, followed by MCX, who had 41 percent in the first six months. Other big profits were Bajaj Finance, Bajaj Finserv, Cholamandalam Investment and Finance Company, and SBI Life, each of which delivered profits of more than 30 percent so far in 2025. Shares such as Kotak Mahindra Bank, Shriram Finance, Muthoot Finance, HDFC Life and HDFC asset management also delivered healthy returns in the 20-30 percent range, reflecting a broad strength in the financial services sector. However, a few laggards dragged the index slightly. REC emerged as the worst performer, dropped by almost 20 percent, followed by PFC, which fell by 6.6 percent, and Icici Prudential Life Insurance, which dumped just over 1 percent. RBI guidelines and brokerage perspective One of the most important developments that support sentiment in financial names was the announcement of the Reserve Bank of India (RBI) of final guidelines on project financing, which significantly decreased earlier draft proposals. According to Motilal Oswal Financial Services (MOSL), the most striking change is the relaxation in providing norms for loans under the construction. “The final guidelines are much softer than expected and will not apply retrospectively,” Mosl said, noting that loans with financial closure already completed will continue under the old supply framework. This change provides relief to borrowers and removes overhang over quality asset quality for projects under the construction. Mosl also emphasized that the revised standard asset supply is now about 1-1.25 percent, which is sharply lower than the initially proposed 5 percent. During the operational phase, the provision further facilitates up to 0.4-1 percent, depending on the type of project type. Among non-banking financial enterprises (NBFCs), PFC and REC is likely to benefit most as a result of their high exposure to the project loan and adequate supply buffers. “From March 2025, the provision of phase 1 and 2 was 1.13 percent and 0.95 percent respectively,” Mosl said. Other financial players such as Bajaj Housing Finance, Lic Housing Finance, Pyramal Enterprises and L&T Finance may face higher supply costs from October 2025, but it is likely to be passed on to borrowers, relieving the impact on profitability, Mosl added. In general, the Sharp Rally in the Nifty Financial Services Index in H1 2025 highlights the investor faith in the financial sector of India. As macro winds make comfortable and improve the clarity of the regulatory, the sector looks well positioned for sustained performance. With the restoration of corporate earnings on the horizon and robust support from both foreign and domestic investors, the momentum in financial services shares can continue throughout the year. Important names such as SBI cards, Bajaj Finance and MCX are already leading the charge, and broader rear winds can further lift the sector. Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.