Key Points

This strong rally outpaced other sectoral indices and reflected growing investor confidence in the sector's strength and improving economic conditions.

On Friday, the index hit an all-time high of 27,305.6 during intra-day trading, marking an approximately 22.19 per cent jump from its 52-week low of 22,320.85.

A 1.5 per cent rise in the Thursday session further boosted its upward momentum, supported by easing geopolitical tensions, falling crude oil prices, and a softer US Dollar Index.

These factors are attracting foreign portfolio investors to Indian markets. Domestic institutional investors (DIIs) have also played a key role in supporting the rally.

Investor sentiment is also being lifted by hopes of strong corporate earnings in the April-June quarter of FY26, especially in banking, insurance, and other financial services.

The Nifty Financial Services Index has delivered a steady performance over the past year, gaining 15.4 per cent.

In the past four months alone, it rose 3 per cent in June, 1.3 per cent in May, 6.5 per cent in April, and 9.2 per cent in March.

The only weakness came at the beginning of the year, with slight declines of about 1.7 per cent in January and 0.6 per cent February.

A major reason for the recent optimism is the Reserve Bank of India's final guidelines on project finance.

The central bank softened its earlier draft norms, easing concerns around asset quality.

According to Motilal Oswal Financial Services (MOSL), the new rules reduce the amount of money lenders need to set aside for under-construction projects.

Also, the guidelines won't apply to older loans where financial closure is already complete.

MOSL said that under the new rules, standard provisioning for such loans has been reduced to around 1-1.25 per cent from the earlier proposed 5 per cent.

Once the projects become operational, the provisioning can go down further to as low as 0.4 per cent, depending on the type of project.

- IANS