Nifty Bank suffered a steep fall of nearly 1,800 points in just two trading sessions, slipping below the 54,000 mark for the first time in four months. The index closed near 53,786, recording a decline of 3.23%, as heavy selling hit major lenders including HDFC Bank, ICICI Bank, Axis Bank, SBI, IndusInd Bank and IDFC First Bank.
The correction was driven by fears of further interest rate hikes by the Reserve Bank of India, rising global bond yields and weakness in the rupee. Investors worry that higher borrowing costs could squeeze banks’ margins. Bond yields in the United States surged past 5.25% while Indian yields stayed above 7.15%, adding pressure on treasury portfolios.
The rupee slipped to ₹96.14 per USD, its weakest level in two months, as crude oil prices climbed, raising concerns over inflation and import costs. Analysts believe volatility may continue until the RBI policy meeting scheduled in early October.
Nomura has projected only 25–50 bps of hikes by December, much lower than the 125 bps feared by markets. Experts say if the central bank adopts a measured approach, banking stocks could see relief rallies, but near‑term sentiment remains cautious with risks from high yields, weak currency and expensive oil.