Why Axis Securities Stocks Is Suddenly Bullish On Banking And NBFC Stocks Again

May 16, 20264 Mins Read

16 May, 2026: Now brokerages are turning positive again. After the Q4FY26 earnings season, Axis Securities stocks picked ICICI Bank, SBI and Bajaj Finance among its top conviction bets in the banking and NBFC space.

Author: Aadarsh Patel | EQMint

The brokerage believes improving asset quality and lower credit costs could drive a fresh earnings cycle over the next 2 years.

India’s banking sector spent the last year dealing with margin pressure, unsecured loan stress and slowing deposit growth.

But the bigger story is this:

The market is slowly moving back toward financial stocks after spending months chasing defence, railways and PSU momentum plays.

Why banking stocks are becoming attractive again

For most of 2025, investors stayed cautious on banks because:

Deposit growth remained weak

Margins started compressing

Unsecured retail lending stress increased

NBFC funding costs stayed elevated

That pressure now appears to be easing.

Large lenders reported healthier loan growth during Q4FY26 while bad loan trends remained under control. Axis Securities stocks said stress in unsecured portfolios has reduced materially across several lenders.

That matters because the entire banking sector correction started when investors feared retail credit quality could deteriorate sharply.

Right now, that worst-case scenario hasn’t happened.

ICICI Bank remains the brokerage’s strongest private banking bet

Axis Securities stocks maintained a “Buy” rating on ICICI Bank with a target price of ₹1,700, implying nearly 36% upside from current levels.

The brokerage expects:

Stable margins

Strong retail growth

Controlled credit costs

Continued improvement in unsecured lending trends

ICICI Bank is benefiting from something investors love during uncertain periods: consistency.

The bank avoided aggressive lending mistakes during the post-COVID retail credit boom. That discipline is now paying off.

SBI is quietly becoming the PSU banking favourite again

State Bank of India is back in focus because PSU banks are no longer being viewed purely as cyclical recovery trades.

SBI’s credit growth stayed strong during Q4FY26, while asset quality improved further. Axis Securities stocks reportedly assigned a target price of ₹1,285 on the stock.

The interesting part is valuation.

Compared to private banks, SBI still trades at relatively lower multiples despite improving profitability and stronger balance-sheet quality.

That combination keeps attracting institutional investors.

Bajaj Finance still dominates the NBFC conversation

Bajaj Finance remains one of the brokerage’s top NBFC picks with a target price of ₹1,160.

Axis Securities stocks expects:

AUM growth of 22-24%

Lower credit costs

Better MSME loan recovery

Continued customer expansion

The company’s biggest strength is scale.

Even after becoming one of India’s largest NBFCs, Bajaj Finance still keeps gaining market share faster than many smaller competitors.

That’s rare in financial services.

My analysis: the market is shifting back toward earnings quality

This rally probably isn’t about excitement. It’s about predictability.

After months of speculative moves in sectors driven mostly by momentum, investors are returning to companies where earnings visibility actually looks stable.

Banks and NBFCs suddenly look attractive because:

Asset quality fears are easing

Loan growth remains healthy

Valuations corrected earlier

Credit demand in India still stays strong

But risks haven’t disappeared completely.

High oil prices, geopolitical tensions and slower deposit growth can still pressure margins later this year. Axis Securities stocks itself warned about those risks while staying bullish overall.

Still, the tone has clearly changed.

For the first time in months, the Street looks willing to believe that Indian financial stocks may be entering another steady earnings phase instead of preparing for a slowdown.