Foreign portfolio investors' interest gives private lenders a boost

The Nifty Private Bank index has rallied 150% in the past five years compared to 78% returns given by the Nifty amid a steady increase in FPI ownership

Shares of private banks have decisively outperformed the broader markets in the past five years as foreign portfolio investors (FPIs), who are known to be price-setters in the Indian markets, have deployed the bulk of their resources in this sector.

Since 2013, the Nifty Private Bank index, which is a gauge of private bank stocks, has rallied 150 per cent against 78 per cent returns given by benchmark Nifty, data showed. 

Experts say strong growth prospects along with comparatively low toxic assets are increasingly driving FPIs towards Indian private bank stocks. 

All the top private banks today have significant FPI shareholding with cases