Indian banks’ market cap jumps in Q3 backed by GST rate cut, festive demand; small banks among biggest gainers: S&P data

The market cap rankings of the top 10 banks remained unchanged on a quarter-on-quarter basis in Q3FY26.

The majority of India’s domestic banks witnessed a rise in their market capitalisation in the October-December quarter of the current fiscal year, supported by a rally in their stock prices, shows an analysis by S&P Global Market Intelligence. This was backed by a broader surge in domestic demand spurred by a reduction in goods and services tax (GST), coupled with a jump in spending during the festive season. Smaller private-sector banks led gains in market cap after faring worse than their public-sector peers in the previous quarter, according to the report.

“Seventeen of the top 20 listed banks posted market cap gains after domestic demand was boosted by cuts in the goods and services tax in September, just before the festive season that starts with the Hindu Diwali festival and continues through the new year,” according to a report by S&P Global Market Intelligence (SPGMI).

Banks ranked 11-20 by market cap showed churn, unlike their larger counterparts, show data shared by SPGMI.

IDFC First Bank posted a 43.8 per cent surge in market cap to Rs 735.89 billion in Q3FY26, catapulting the Mumbai-based lender to 13th place in the rankings from 17th in the previous quarter, SPGMI data show. The Federal Bank followed with a market cap gain of 38.6 per cent to Rs 657.54 billion. State-run lenders, Indian Overseas Bank and UCO Bank, were the biggest laggards, registering a decline of 8.6 per cent and 3.4 per cent to Rs 695.74 billion and Rs 369.29 billion, respectively, according to the data.

The Nifty Bank index, which tracks the most liquid and largest banks in India, rose about 7.6 per cent in the December 2025 quarter, outpacing the benchmark Nifty50 index, which registered a 5.2 per cent gain during the period under consideration.

The Reserve Bank of India’s (RBI) 125 basis points reduction in the repo rate since February this year, combined with the cut in goods and services tax (GST) in September, has boosted domestic demand and credit growth. The provisional quarterly business number filed by various lenders for the October-December 2025 quarter showed that a large number of banks continued to clock double-digit growth in their loan book driven by strong demand, according to the report.