The Nifty Financial Services Index has emerged as the best-performing sector in the first half of 2025, recording an impressive 15.5% year-to-date (YTD) gain, as per recent data released on Friday. This performance has outpaced other sectoral indices, reflecting renewed investor confidence in the financial sector amid a backdrop of improving macroeconomic conditions.
On Friday, the index touched a record intra-day high of 27,305.6 &mdash; a rise of nearly 22.19% from its 52-week low of 22,320.85. A 1.5% gain in the previous trading session further fueled its rally, buoyed by easing geopolitical tensions, declining crude oil prices, and a softer US Dollar Index.
These factors have prompted increased inflows from foreign portfolio investors into Indian equities. Domestic institutional investors (DIIs) have also contributed significantly to the rally, particularly amid expectations of robust corporate earnings for the April&ndash;June quarter of FY26, especially in banking, insurance, and allied financial services.
The Financial Services Index has shown strong resilience over the past year, with a 15.4% annual gain. Monthly performances include a 3% rise in June, 1.3% in May, 6.5% in April, and 9.2% in March. Minor setbacks were seen in January and February with respective dips of 1.7% and 0.6%.
Much of the optimism is attributed to the Reserve Bank of India&rsquo;s recently finalised guidelines on project finance. The revised norms eased market concerns by scaling back stringent provisioning requirements that were proposed in the draft version.
Motilal Oswal Financial Services (MOSL) noted that the new regulations require lenders to allocate significantly less capital toward under-construction project loans. The standard provisioning has now been reduced to 1&ndash;1.25%, down from the initially suggested 5%. Furthermore, once the project becomes operational, provisioning could drop further to as low as 0.4%, depending on the nature of the project.
These changes are expected to enhance liquidity, reduce risk for lenders, and stimulate fresh investments in infrastructure and development sectors. [Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed]

Financial services lead Indian market rally, fueled by RBI reforms and investor optimism

Nifty Financial Index Soars 15.5% in H1 2025

Financial services lead Indian market rally, fueled by RBI reforms and investor optimism

June 27, 2025 | 21:01 IST