General Elections 2024: Private banks or public sector lenders - who will benefit more from Modi's likely win?

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over 12 percent in this period.In the Nifty Private Bank index, barring 3 stocks - ICICI Bank (13.5 percent), Axis Bank (6.6 percent), and Federal Bank (4.5 percent), all other constituents have given negative returns in 2024 YTD. Bandhan Bank shed the most, down over 22 percent, followed by IDFC First Bank, down over 12 percent, HDFC Bank, down 11 percent and Kotak Bank, down 10.8 percent.

IndusInd Bank, RBL Bank and City Union Bank also lost 2.9-10 percent.On the contrary, all constituents of the Nifty PSU Bank index have delivered positive returns this year so far. Indian Overseas Bank is the top gainer, up 55.5 percent, followed by Bank of Maharashtra, up 51 percent.

All other PSU banks in the index have advanced between 14 and 43 percent each.The key reason behind the consolidation in private banks recently, according to Chris Wood, is the regulatory pressure from the Reserve Bank of India (RBI) to slow loan growth in the retail segment, particularly in the area of unsecured loans, and to “manage" loan-to-deposit ratios.He added that public sector banks, which still account for 61% of deposits, have become more competitive helped by Narendra Modi’s structural reforms such as the Insolvency and Bankruptcy Act of 2016.We believe banking stocks are poised to deliver a strong performance and we remain positive on banks. In Q4, banks reported largely in-line results, with highlights being healthy credit growth, improved deposit mobilisation, a moderating pace of margin compression, and strong asset quality metrics.