The Indian banking and financial sector faced a rough trading session on the back of disappointing Q1 results from Axis Bank, leading to a sharp selloff across private banks, insurance companies, and NBFCs.
Bank Nifty dropped over 1%, while Nifty Financial Services and Nifty Private Bank indices also ended lower.
Axis Bank Drag Leads the Fall
Shares of Axis Bank tumbled as much as 6.36% to ₹1,086 after the lender posted a 3% year-on-year drop in consolidated net profit to ₹6,243.72 crore for Q1FY26.
The decline in profits was attributed to changes in the bank’s classification norms for non-performing assets (NPAs) and its loan upgrade policies, which affected its bottom line.
The weak performance of Axis Bank triggered a wave of selling in other banking and financial stocks.
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Banking Stocks in Deep Red
The broader impact of Axis Bank’s earnings was visible in the market. The Nifty Bank index fell over 1%, marking its second straight session of losses.
Out of 12 stocks in the index, 11 traded in the red. The only exception was IndusInd Bank, which managed to stay afloat with a 1% gain.
Key private lenders like Kotak Mahindra Bank, State Bank of India, HDFC Bank, ICICI Bank, and IDFC First Bank also saw declines of up to 1.5%.
Insurance and NBFC Stocks Also Feel the Heat
The selling wasn’t limited to banks. Insurance companies and NBFCs also faced strong downward pressure in Friday’s trade:
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Bajaj Finserv
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LIC Housing Finance
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ICICI Prudential Life Insurance
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HDFC Life
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Shriram Finance
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SBI Life Insurance
All these stocks fell as much as 2%, adding to the weakness in the financial space.
The Nifty Financial Services index dropped nearly 1%, while the Nifty Private Bank index slipped 1.23%, with 8 out of its 10 stocks in the red.
What’s Next for Financial Stocks?
The back-to-back decline in financial indices reflects growing concerns about asset quality, margin pressure, and earnings volatility in the banking sector.
With Axis Bank’s earnings raising red flags, investors are likely to remain cautious on financial names, especially ahead of other key results from major banks and NBFCs.
Until earnings clarity improves, the financial sector may continue to face volatility in the near term.
