HDFC Bank led the banking selloff after June-quarter earnings missed expectations on key metrics.
Axis Bank and Kotak Mahindra Bank declined on margin concerns, while ICICI Bank gained after strong results.
Banking weakness dragged markets lower as Brent crude climbed above $90 amid geopolitical tensions.
Shares of HDFC Bank led a broad-based selloff in banking stocks on Monday after the country's largest private lender reported June-quarter earnings that missed Street expectations on key operating metrics, even as brokerages maintained positive ratings on the stock.
At around 10:00 a.m., HDFC Bank shares were down 4.52% at ₹782.50, extending the stock's decline for 2026. The lender had ended Friday's session 1.4% higher at ₹819.60 ahead of its earnings announcement.
4 July 2026
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The weakness spread across the banking pack, with Axis Bank falling more than 5%, Kotak Mahindra Bank declining over 3%, while ICICI Bank bucked the trend, gaining around 0.5% after reporting stronger-than-expected quarterly earnings.
The selloff in banking heavyweights dragged the broader market lower. The Nifty 50 fell 0.6% to 24,185.80, the Sensex declined 0.72% to 77,587.23, while the Bank Nifty slipped 1.5% in early trade. Sentiment also remained cautious as Brent crude oil prices climbed above $90 per barrel amid escalating geopolitical tensions in the Middle East.
HDFC Bank Falls Despite Positive Brokerage Calls
HDFC Bank reported a standalone net profit of ₹19,059.72 crore for the April-June quarter, up 4.98% year-on-year.
Net interest income (NII) increased 6.7% to ₹33,535.95 crore, marginally below analysts' estimate of ₹34,353 crore. Net interest margin (NIM) stood at 3.26% on total assets, while gross non-performing assets (GNPA) were at 1.17% and net NPAs at 0.41% as of June 30, 2026.
Despite the earnings miss, brokerages largely retained their positive outlook on the lender.
Jefferies maintained its 'Buy' rating with a target price of ₹1,050, saying the slight miss on NII was offset by lower operating expenses and credit costs.
Bernstein reiterated its 'Outperform' rating and ₹1,150 target price, citing healthy balance sheet growth, operating efficiency and stable asset quality despite persistent margin pressure.
Nomura also retained its 'Buy' rating with a target price of ₹950, describing the quarter as broadly in line with expectations while highlighting improving loan and deposit growth momentum alongside pristine asset quality.
HDFC Bank, with a market capitalisation of more than ₹12.64 lakh crore, had already fallen 17.2% so far in 2026 through Friday's close, compared with a 6.9% decline in the Nifty 50.
Axis Bank Slides On Margin Pressure
Axis Bank shares dropped more than 5% after investors focused on margin compression despite the lender reporting healthy profit growth.
The bank posted a 23% increase in standalone net profit to ₹7,114 crore, while consolidated net profit rose 22.23% to ₹7,632 crore.
Net interest income grew 8% year-on-year to ₹14,646 crore, supported by a 19% increase in advances. However, net interest margin narrowed to 3.46% from 3.80% a year ago and 3.73% in the previous quarter.
Managing Director and CEO Amitabh Chaudhry said the bank believes margins have bottomed out during the current cycle and should improve going forward, although he did not provide a specific guidance.
The lender also benefited from lower provisions during the quarter. Gross slippages declined on a yearly basis, although the gross NPA ratio edged up marginally to 1.28% from 1.23% in the March quarter.
Kotak Mahindra Bank Also Trades Lower
Kotak Mahindra Bank also remained under pressure despite reporting higher quarterly earnings.
The lender reported a 22.55% rise in consolidated net profit to ₹5,480 crore, while standalone profit increased to ₹4,123 crore.
Net interest income rose 9% year-on-year to ₹7,928 crore. However, net interest margin moderated to 4.53% from 4.65% a year ago and 4.67% in the March quarter.
Asset quality remained healthy, with the gross NPA ratio improving to 1.18% from 1.48% a year earlier. Advances and deposits grew 15% and 14%, respectively.
ICICI Bank Bucks The Trend
Unlike its peers, ICICI Bank emerged as the standout performer after reporting stronger-than-expected quarterly earnings.
The lender posted a 15.95% increase in standalone net profit to ₹14,804 crore, while consolidated profit rose 13.88% to ₹15,440 crore.
Net interest income climbed 12.7% year-on-year to ₹24,384 crore, supported by nearly 20% growth in advances. Net interest margin improved slightly to 4.36%.
Executive Director Sandeep Batra said margins expanded despite the broader industry trend due to an income tax refund and repricing of term deposits. He added that inflows under the FCNR(B) scheme could marginally dilute margins going forward but are expected to remain within the bank's FY27 guidance.
The bank's asset quality also strengthened, with the gross NPA ratio improving to 1.38% from 1.67% a year ago.
The sharp declines in HDFC Bank, Axis Bank and Kotak Mahindra Bank outweighed gains in ICICI Bank and Reliance Industries, keeping benchmark indices under pressure in early trade.
Apart from earnings-related concerns, investor sentiment also remained cautious after crude oil prices climbed above $90 per barrel amid escalating tensions in the Middle East, raising concerns over inflation, interest rates and the outlook for global economic growth.
