Source: BS
Context:
According to S&P Global Market Intelligence, private sector banks in India underperformed their government-owned counterparts in market capitalisation during July–September 2025, primarily due to trade uncertainties and corporate lending exposure.
Market Capitalization (MCAP)
MCAP stands for Market Capitalization. It is a measure of the total value of a publicly traded company’s outstanding shares in the stock market.
Formula:
Market Capitalization (MCAP)=Current Share Price × Total Number of Outstanding Share
Private Sector Banks Performance:
- HDFC Bank: mcap declined by 4.8%.
- ICICI Bank: mcap declined by 6.7%.
- Kotak Mahindra Bank and Axis Bank: Also posted mcap declines in Q3 FY25.
- IndusInd Bank: Worst performer among top 20 lenders, losing 15.7%, partly due to accounting lapses reported earlier in 2025.
Reason for Underperformance:
- Higher exposure to corporate lending, making them sensitive to global trade shocks.
- Trade tensions, particularly US tariffs of 50% on Indian goods, affected market sentiment and exporter confidence.
Public Sector Banks Performance
- SBI (State Bank of India): mcap gained 10%.
- Bank of Baroda: +3.9%
- Punjab National Bank: +2.1%
- Canara Bank: +8.3%
- Indian Bank: +16.7% (highest among top 20 banks by mcap)
Reason for Outperformance:
- Larger share of retail loans, especially in smaller towns and rural areas, insulated them from global trade shocks.
- Domestic drivers such as agricultural output, favorable monsoon, lower inflation, monetary easing, and GST reforms supported growth.
