south indian Banking stocks witnessed strong momentum on Monday, with South Indian Bank, AU Small Finance Bank, Federal Bank, and DCB Bank jumping between 8% and 13%. The surge came amid bullish sentiment in the financial sector, backed by better-than-expected earnings, lower NPAs, and strong credit offtake in retail and MSME segments.
Investors are betting on continued growth in mid-tier lenders as they expand their branch networks and adopt digital-first strategies to compete with larger players. The rally also reflects expectations of steady interest rates and robust festive season demand boosting loan growth in Q3 FY26.
According to market watchers, the latest price action signals a sector-wide re-rating of smaller private banks, which are increasingly viewed as strong growth stories in India’s rapidly evolving financial landscape.
