Top Banking Stocks in India: Bank Nifty, Meaning, Benefits & More

The banking sector is an essential part of any economy and plays a critical role in the functioning of the stock market and the overall economy. Banking stocks in India greatly interest investors due to their potential for long-term growth and steady dividend income.

In this blog, we’ll explore the nuances of the best banking sector stocks, including what they are, the best bank stocks to buy for the long term, and the factors you should consider while investing in them. Moreover, we will also highlight the best bank stocks to buy in 2024. This will also include the top banking sector smallcases for you to consider.

List of Top Banking Stocks in India

Here is a bank sector stocks list of the top Indian private and public banks:

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data on this list of banking stocks in India is dynamic and subject to real-time changes. The stocks listed were shortlisted on 29th November 2024, and the data is derived from the Tickertape Stock Screener using the following filters:

• Sector > Financials > Public Banks & Private Banks
• 5Y CAGR: Set the lower limit to zero (positive)
• Net Profit Margin: Set the lower limit to zero (positive) – Sort from highest to lowest
• Total Deposits (Cr): Set to High

🚀 Pro Tip: You can use Tickertape’s Stock Screener to research and evaluate stocks with over 200+ filters and parameters.

High-volatility stock portfolios for investors with a high risk appetite

Try smallcase

DISCOVER

High-volatility stock portfolios for investors with a high risk appetite

Try smallcase

Best Banking Sector Stocks in India

Let’s look at the best bank stock in India listed above in detail.

Kotak Mahindra Bank Ltd

Kotak Mahindra Bank is one of the leading private-sector banks in India. It was founded in 2003. The bank offers a wide range of banking products and services for retail and corporate customers, including accounts, loans, cards, investment services, insurance and asset management. Over the last 5 years, the company’s current ratio has been 17.05, higher than the industry average of 11.90. Kotak Mahindra Bank is among the best stocks in financial sector in India, making it a strong contender in the banking stocks list NSE.

Axis Bank Ltd

Axis Bank is one of India’s top private banking shares. It is renowned for its innovative financial solutions and customer-focused approach. Thus, with a comprehensive suite of banking services, it stands out as a dynamic player in India’s rapidly evolving financial sector. Over the last 5 years, the bank’s current ratio has been 12.08, slightly higher than the industry average of 11.90. 

ICICI Bank Ltd

ICICI Bank is recognised for its innovative banking solutions and diverse financial offerings, catering to retail and corporate clients. As of 29th November 2024, the company had a market capitalisation of Rs. 9,17,425.70 cr., and its share price closed at Rs. 1,300.10. Over the last 5 years, the bank’s net income has grown at a yearly rate of 59.75%. This is higher than the industry average of 43.24%. As one of the best stocks in financial sector in India, its current ratio has been 14.13, also higher than the industry average of 11.90.

HDFC Bank Ltd

HDFC Bank is one of India’s largest private sector banks and consistently ranks among the best banking stocks to buy in India for long term. As one of the best banking sector stocks, it offers a wide range of financial products and services. As of 29th November 2024, the bank had a market capitalisation of Rs. 13,73,054.86 cr., and its share price closed at Rs. 1,796.05. Over the last 5 years, the bank’s revenue has grown at a yearly rate of 26.87%, higher than the industry average of 16.68%, and its market share increased from 22.92% to 34.46%. 

Bank of Baroda Ltd

Bank of Baroda Ltd is a leading Indian public sector bank known for its extensive banking services, which include retail, corporate, and international banking. With its robust presence, Bank of Baroda is mentioned as one of the best stocks in financial sector in India. Over the last 5 years, the company’s revenue has grown at a yearly rate of 18.45%, higher than the industry average of 14.77%, and its market share increased from 9.18% to 10.32%.

Indian Bank

As one of the best finance stocks in India for long term, Indian Bank demonstrates a solid commitment to customer service and financial inclusion, making it a prominent public sector bank. It offers various banking products and services, contributing significantly to India’s economic growth and development. Over the last 5 years, the company’s revenue has grown at a yearly rate of 24.97%, higher than the industry average of 14.77%, and its market share increased from 3.18% to 4.68%. This performance secures Indian Bank’s position among the best financial sector stocks.

Union Bank of India Ltd

Union Bank of India is a prominent public sector bank that delivers a broad spectrum of financial services to diverse customer segments. Thus, its strategic initiatives and customer-centric approach position it as a key contributor to the nation’s best banking sector stocks. Over the last 5 years, the company’s revenue has grown at a yearly rate of 24.6%, higher than the industry average of 14.77%, and its market share increased from 5.94% to 8.6%. 

State Bank of India

SBI is India’s largest public sector bank and a leader in the banking stocks list NSE. It serves a vast customer base with an extensive network of branches and ATMs. SBI is widely regarded as one of the best stocks in financial sector in India, offering savings accounts, loans, and other investments. As of 29th November 2024, the bank had a market capitalisation of Rs. 7,48,731.00 cr., and its banking sector share price closed at Rs. 838.95. 

Canara Bank Ltd

Its widespread network and diverse banking offerings make Canara Bank, a leading public sector bank, well-known. Therefore, committed to financial inclusion, this may be one of the best bank stocks to buy now in India. Over the last 5 years, the company’s revenue has grown at a yearly rate of 19.19%, higher than the industry average of 14.77%, and its market share increased from 8.74% to 10.13%. 

Bank of India Ltd

Bank of India is a well-established public sector bank in the banking sector share list with a rich history and a comprehensive range of banking products and services. Thus, it continues to be a trusted financial partner, contributing to the economic progress of the top 10 bank stocks in India for the long term. Over the last 5 years, the company’s current ratio has been 14.81, higher than the industry average of 10.18.

Get 500+ Readymade Stock Baskets

Created & managed by SEBI-registered experts

Try smallcase

Get 500+ Readymade Stock Baskets

Created and managed by SEBI-registered experts

Try smallcase

How to Invest in Banking Stocks?

Various avenues allow investors to invest in banking stocks in India. You can buy individual bank shares, invest in banking ETFs or mutual funds, consider banking-specific portfolio management services (PMS), explore structured products linked to banks, or opt for bank-issued fixed deposits and bonds for a fixed income with lower risk. Thus, choose the best banking stocks in India based on your risk tolerance and investment objectives. However, as mentioned earlier, you can also consider smallcase for your banking sector investments!

Top Banking Sector smallcases

House of HDFC

The House of HDFC smallcase includes the stocks of companies that are subsidiaries of HDFC Group, one of India’s largest financial conglomerates. It was created by Windmill Capital.

The smallcase provides exposes investors to a diversified range of HDFC Group companies. These companies have a strong presence in India’s financial services industry. Furthermore, it provides investors with a long-term investment opportunity, as the companies included in the smallcase have a strong track record of growth and profitability.

House of HDFC smallcase by Windmill Capital

Disclosures for House of HDFC smallcase

Banking and Finance

The Banking and Finance smallcase is a basket of handpicked stocks of banks and financial institutions listed in India. It was created by Angel One. 

This smallcase is designed to provide investors with exposure to the banking and financial services sector. The presence of NIFTY Banks provides exposure to the top banks of India. At the same time, NIFTY financial services provide exposure to the top financial companies of the country.

Banking and Finance smallcase by Angel One

Disclosures for Bank & Finance smallcase

Banking Tracker

The Banking Tracker smallcase consists of companies that track the performance of the banking industry in India. It was created by Windmill Capital.

This smallcase includes some of the most prominent banking and financial services companies listed on the Indian stock exchanges. The Banking Tracker smallcase is designed to provide investors with a diversified portfolio of banking stocks. Thus, it can help to mitigate the risk associated with investing in a single stock or a narrow group of stocks.

Banking Tracker smallcase by Windmill Capital

Disclosures for Banking Tracker smallcase

What are Banking Stocks?

Bank sector stocks are bank shares to buy of companies that provide financial services, such as commercial banks, investment banks, and insurance companies.

These leading private sector banks in India provide financial services such as deposits, loans, and investment services to their customers. The overall health of the economy and the stock market closely influences the performance of the best banking stocks in India. Therefore, the best banking sector stocks, including small cap banking stocks, mid cap bank stocks, and large-cap bank stocks, play a critical role in providing liquidity to businesses and individuals.

Banking Sector in India – Overview

In India, the banking sector stocks include public, private, and foreign banks stocks. However, the best bank to invest in India in the banking sector has a crucial role in the Indian economy, accounting for a significant portion of the GDP and providing crucial financing and lending services to businesses and individuals.

Companies in the bank sector stocks list belong to the best banks to invest in India and have long been a reliable source of long-term growth and income for investors. However, recent trends and developments, such as the rise of fintech companies, have changed how traditional banking business models operate.

Despite this, the best bank stocks to buy India have shown resilience, adapting to the evolving landscape to retain their value for investors.

How to Identify the Best Banking Stocks to Buy in India?

Identifying the top 5 banking stocks in India involves a multi-faceted approach, analysing key ratios and considering other financial factors. Therefore, here’s how you can analyse the best stock in financial sector using these ratios:

Price-to-Earnings (P/E) Ratio

• Compare the P/E ratio to the bank’s historical average and industry peers. A lower P/E ratio may indicate potential undervaluation.
• Consider the bank’s growth prospects. Hence, a higher P/E ratio can demonstrate high growth potential.

Price-to-Book (P/B) Ratio

• Look for banks with a P/B ratio below 1.0. This suggests the stock might be undervalued compared to its book value.
• Beware of banks with very low P/B ratios, which could indicate potential problems.

Efficiency Ratio

• A lower efficiency ratio indicates better operational efficiency and profitability. Therefore, banks should aim for an efficiency ratio below 60%.
• Compare the efficiency ratio to the industry average and the banks performance historically.

Loan-to-Deposit Ratio (LDR)

• An LDR between 70% and 85% is generally considered healthy. This indicates that the bank is effectively using its deposits for lending and income generation.
• Avoid banks with very high LDRs, which can signify excessive risk exposure.

Capital Ratios

• Analyse key capital ratios such as the Tier 1 Capital Ratio and Total Capital Ratio. These ratios measure a bank’s ability to absorb losses.

Who Should Invest in the Bank Sector?

Investors seeking exposure to the financial sector and a stable income stream through dividends may consider investing in the best stocks in the financial sector in India. However, it is crucial to thoroughly analyse individual banks’ financial health, risk management practices, and regulatory compliance before investing. Thoroughly evaluating these factors helps investors identify which bank shares to buy in the bank sector stocks list, ensuring their risk appetite aligns with the potential returns. The banking sector stocks remain a vital component of the best stock in financial sector, offering opportunities in an ever-evolving financial landscape.

What is Bank NIFTY?

Bank NIFTY is a stock market index that tracks the performance of the top bank stocks in India. It is also known as the Bank index and is a subset of the larger NIFTY 50 index. The Bank NIFTY index or Fininifty (also called Nifty Financial Services) can provide investors with a benchmark for measuring the performance of the banking sector in India. Institutional and retail investors widely follow it. It can be used as a proxy for the overall health of the Indian economy. 

The Bank NIFTY index includes 12 of India’s most liquid and large-cap banking stocks listed on the National Stock Exchange (NSE).

You can check out the Bank NIFTY stocks list in the table below:

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data on the top bank stocks in India in the list is from 29th November 2024. The data is derived from the Tickertape Stock Screener.

How Does NIFTY Bank Work?

Nifty Bank is a market capitalisation-weighted index that tracks the performance of banking stocks in India. It operates based on a free-float market capitalisation-weighted methodology. The index’s free-float market capitalisation determines the weight of each stock. Therefore, the more valuable a company is in market capitalisation and the more shares it has available for trading, the higher its weight in the index.

How NIFTY Bank is Calculated?

The index is calculated using the free-float market capitalisation method. The market capitalisation of each constituent stock is potentially multiplied by its free-float factor to determine its weight in the index.

The formula for calculating the Nifty Bank index is as follows:

Nifty Bank Index = (Sum of Free Float Market Capitalisation of all stocks in the index) / Base Market Capitalisation x 100

Note: Here, the base market capitalisation is the market capitalisation of the index on the base date, which is January 1, 2000, with a base value of 1000 points.

Advantages of Investing in Banking Stocks

Investing in the best stock in banking sector from the bank stock list offers the following benefits:

• Steady and Reliable Dividends: Banks have a history of paying steady dividends, making them a reliable choice for regular income. Predictable cash flows from lending and investments allow banks to maintain consistent payouts, even as bank share price today fluctuates.

• Long-Term Growth Potential: Banks benefit from economic growth by expanding loan portfolios and introducing new financial services, boosting profitability. The low price bank share list includes options with significant growth potential for long-term investors.

• Stability During Economic Downturns: Bank shares are considered defensive investments, offering stability despite short-term market volatility. The bank shares list often withstands downturns better than other sectors, providing opportunities even during uncertain times.

• Diversification Across Industries: Banks finance a variety of businesses, offering investors exposure to multiple industries. This reduces portfolio risk, making the low price bank share list an appealing option for diversification.

Challenges Faced by the Banking Sector in India

• Regulatory Changes: Complex regulations, like AML rules and data protection laws, can affect bank profitability. Banks are automating compliance to stay efficient. Investors looking at the bank stock list should evaluate how regulatory changes impact performance.

• Cybersecurity Risks: Digitalisation increases the risk of cyberattacks. Top banks invest in cybersecurity and partner with firms to secure customer data, ensuring their place in the best stock in banking sector.

• Growing Competition: Fintech and digital banks have intensified competition. Traditional banks are adopting technology and new business models to remain competitive, maintaining relevance in the bank shares list.

• Economic Uncertainty: Political and economic instability can reduce demand for financial services. Banks are diversifying portfolios and using technology to manage risks, ensuring stability in the best stock in banking sector.

• Fintech Disruption: Fintech offers faster, cheaper services, challenging traditional banks. In response, banks are increasing technology investments and partnering with fintech firms to remain competitive and retain their position in the bank stock list.

• Talent Management: Banks need skilled employees in technology, compliance, and customer service. Investments in training ensure they stay competitive and maintain their standing in the bank shares list.

Factors to Consider While Investing in Banking Stocks

• Regulatory Risks: Changes in regulations can impact profitability. Investors should consider regulatory compliance when selecting from the best bank shares to buy now.

• Credit Risk: Loan quality impacts profitability. Assess the best bank stocks in India for non-performing loans and strong underwriting practices.

• Interest Rate Risk: Interest rate changes affect banks’ revenues from loans and deposits. Consider a bank’s sensitivity to these changes when investing in the best banking share to buy.

• Technology and Cybersecurity: Evaluate a bank’s ability to adopt new technologies and manage cybersecurity risks. This can impact the bank share price today and long-term profitability.

• Government Policies: Tax laws, capital requirements, and monetary policies influence banking stocks. Be aware of how these factors affect the best stock in banking sector.

• Competition: India’s banking sector is highly competitive. The best bank stocks list includes banks that maintain a strong position amidst changing industry dynamics.

1 Crore+ people use smallcase for their investments

Download App

1 Crore+ people use smallcase for their investments

Download App

To Wrap It Up…

One could benefit from the banking sector’s long-term growth and steady dividend income. However, it’s important to consider the risks and factors specific to the banking stocks to buy before investing. Moreover, with investment platforms like smallcase, you can build a low-cost, diversified portfolio instantly. So, what are you waiting for? Download the smallcase app today and begin your investment journey!

As always, please do your own research and/or consult a financial advisor before investing in the best banking share to buy in India.

Frequently Asked Questions on Banking Stocks in India