Gush of institutional funds into banking stocks likely to taper

Rerating cycle may have neared its end as much of the positives are well-priced in

Institutional flows — both domestic and foreign — are reportedly the driving force behind the recent rally in banking stocks, helping the Nifty Bank index regain lost ground faster than other sectors. With returns of 41 per cent in three months, the Nifty Bank compares superior to defensives, such as the Nifty IT and Nifty FMCG indices, and the Nifty (up 22 per cent).

That said, it is still eight per cent short of its year-to-date and year-on-year levels; analysts say with fresh business trends being a mixed bag, investors may hit the pause button, even as the Nifty Bank is