State Bank of India Surpasses ICICI Bank in Market Capitalisation Rankings

State Bank of India (SBI) has overtaken ICICI Bank in market capitalisation rankings during the January-March quarter, emerging as India's second-largest lender by market value. Despite a marginal 0.3% decline in its market cap to Rs 9,040.47 billion, the country's largest lender by assets climbed one spot.

In contrast, ICICI Bank saw a sharper correction of over 10% during the same period, according to S&P Global Market Intelligence data. This decline is expected to be driven by a projected 2 basis points decline in ICICI Bank's net interest margin (NIM) in the fourth quarter of fiscal year 2026.

The broader banking sector saw widespread pressure, with 18 of the 20 largest listed banks witnessing a decline in market capitalisation. This downturn was largely driven by a broad-based sell-off amid escalating geopolitical tensions in the Middle East, despite a two-week ceasefire announced between the US and Iran on February 8.

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Foreign portfolio investors (FPIs) also turned net sellers in March amid weakening global sentiment. After a brief recovery in February, overseas investors sold $10.8 billion worth of Indian equities through March 18, according to the Reserve Bank of India's monthly bulletin.

Global banking indices also remained under pressure during the quarter due to geopolitical concerns.

Banking Sector Performance Comparison

Among individual stocks, IDBI Bank recorded the steepest decline, with its market cap falling 40.3% to Rs 661.27 billion. IDFC First Bank followed, losing 31.2% and reversing a sharp 43.8% gain seen in the previous quarter.

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Despite a 26.1% drop in market cap, HDFC Bank retained its position as the country's most valuable lender, ending the quarter with a market cap of around Rs 11,261 billion. The stock came under pressure following the resignation of its part-time chairman, Atanu Chakraborty, on March 18.

HDFC Bank's fundamentals remain strong, with robust deposit growth and a materially lower loan-to-deposit ratio. According to Suresh Ganapathy, managing director and head of Financial Services Research at Macquarie Capital, this implies that HDFC Bank could be around 200-300 bps ahead of system growth in fiscal 2026. As a result, Ganapathy maintains an "outperform" recommendation for HDFC Bank's stock.