Bulls fired up on Dalal Street to lead the Bank Nifty index to fresh highs in early trade on April 21, with IDFC First Bank, Axis Bank, and AU Small Finance Bank leading the gains.

Bank Nifty topped the 55,200 mark for the first time ever, lead by positive earnings reports from index heavyweights ICICI Bank and HDFC Bank. At 9.40 am, the banking gauge was quoting 55,187.50, higher by 1.6 percent.

Over the past month, the banking index has rallied a sharp nine percent, outperforming the Nifty 50 index, which has risen around 2.5 percent during the same time.

Expectations of more rate cuts from RBI after benign inflation data along with improved NIM outlook as banks lowered savings rates, stable asset quality and attractive valuations are the key triggers behind the rally in banking stocks.

Large private banks have taken the lead, surging to new all-time highs. Their quarterly results over the weekend aligned with market expectations and will continue to drive markets higher, said  HDFC Securities’ Devarsh Vakil, Head of Prime Research.

Further, amid global uncertainty given U.S. President Donald Trump's tariffs, investors are piling into domestic-focused themes and stocks, such as banking and consumption, to sail through the ongoing volatility.

Blue-chip banks post strong earnings

India's largest private lender HDFC Bank's shares rose in trade after the bank posted its quarterly earnings show for the quarter ended March FY2025, showcasing strong growth amid solid loan growth. HDFC Bank posted a 6.7 percent year-on-year rise in standalone net profit to Rs 17,616 crore for the fourth quarter of FY25. On a sequential basis, net profit rose by 5.3 percent.

India's second largest private sector lender ICICI Bank's shares gained two percent after reporting a better-than-expected earnings show for the quarter ended March FY2025. For the quarter ended March, ICICI Bank posted an 18 percent year-on-year rise in standalone net profit to Rs 12,629.58 crore. On a sequential basis, net profit rose 7.1 percent.

Brokerages rushed to upgrade their target prices on ICICI Bank. "Seldom does a bank of the size of ICICI Bank surprise with its operating performance the way this bank has done, that too amid a volatile macro environment, elevated competition for deposits, and ongoing normalization in asset quality," noted domestic broking house Motilal Oswal.

Technical levels to watch

Bank Nifty rallied over 6 percent last week and also formed a long bullish candle on the weekly chart, which is broadly positive. For trend-following traders, the crucial support levels would be 53,500 and 53,100. As long as these levels hold, the uptrend is likely to continue. On the higher side, the index can test 54,500-55,000 and further rise to 55,300.