Why HDFC, Axis Bank, SBI Shares are down today? Key reasons explained

4 Aug 2026 , 11:15 AM

Banking Shares Under Pressure as Markets Brace for RBI Monetary Policy Announcement

Banking stocks witnessed broad-based selling on August 4, 2026, with the Nifty Bank index declining nearly 1% as investors adopted a cautious stance ahead of the Reserve Bank of India’s (RBI) upcoming monetary policy decision.

The index touched an intraday low of 57,651.15, reflecting concerns that while the central bank is widely expected to keep interest rates unchanged, it may adopt a more hawkish tone amid rising inflation and global geopolitical uncertainties.

Market participants are now closely watching the RBI’s policy statement scheduled for August 5, which could shape the outlook for interest rates, banking stocks, and the broader equity market.

Banking Stocks Today (As of 11:10 AM, NSE)

Selling pressure was visible across most frontline private and public sector banks.

Stock	Price	Change
Axis Bank	₹1,253.10	-1.49%
HDFC Bank	₹744.10	-1.18%
ICICI Bank	₹1,445.50	-1.00%
Federal Bank	₹358.65	-3.51%
State Bank of India (SBI)	₹1,039.00	-0.62%

Among the major losers, Federal Bank fell more than 3.5%, making it the weakest performer in the banking pack, while Axis Bank, HDFC Bank, ICICI Bank, and SBI also traded lower.

However, the weakness was not uniform across the sector. Canara Bank, Bank of Baroda, and Punjab National Bank (PNB) traded in positive territory, outperforming their peers.

Why Are Banking Stocks Falling?

The decline in banking stocks is largely driven by investor caution ahead of the RBI’s policy announcement rather than any company-specific developments.

1. RBI Expected to Hold Rates

A Reuters poll of 72 economists showed that 68 expect the RBI to keep the repo rate unchanged at 5.25%.

While a pause is widely anticipated and largely priced into the market, investors are more focused on the central bank’s commentary regarding inflation and future policy direction.

2. Inflation Remains Above RBI’s Comfort Level

India’s retail inflation (CPI) rose to 4.38% in June, remaining above the RBI’s medium-term target of 4%.

Persistent inflation reduces the likelihood of immediate monetary easing and raises concerns that interest rate cuts could be pushed further into the future.

3. Global Geopolitical Risks

Escalating tensions in West Asia have increased uncertainty around global crude oil prices and commodity costs.

Higher energy prices could feed into inflation, making it more difficult for the RBI to adopt an accommodative monetary policy stance.

What the Market Expects from the RBI

The RBI is expected to announce its monetary policy decision on:

• Policy Decision: August 5, 2026, at 10:00 AM IST
• Governor Sanjay Malhotra’s Press Conference: 12:00 PM IST

Most economists believe the RBI will maintain the current repo rate of 5.25%, while emphasizing a data-dependent approach to future policy decisions.

A hawkish tone—highlighting inflation risks and delaying expectations of future rate cuts—could weigh further on banking and rate-sensitive sectors.

Why the RBI May Still Choose to Pause

Despite inflation concerns, several macroeconomic indicators support maintaining the current policy stance.

These include:

• Improving foreign portfolio investor (FPI) inflows.
• Better-than-expected kharif sowing supported by a favorable monsoon.
• Easing concerns around El Niño, improving the food inflation outlook.
• A broadly balanced economic growth trajectory.

These factors provide the central bank with room to monitor incoming data before making any significant policy changes.

How RBI Policy Impacts Banking Stocks

The RBI’s monetary policy plays a critical role in determining borrowing costs, deposit rates, loan growth, and banking sector profitability.

While stable interest rates generally support credit growth, the market also watches the central bank’s guidance closely.

If the RBI signals that inflation risks remain elevated and future rate cuts may be delayed, banking stocks could remain volatile in the near term as investors reassess earnings expectations and valuation multiples.

Outlook

With the RBI policy announcement just a day away, banking stocks are likely to remain driven by macroeconomic expectations rather than company-specific news.

While the consensus points to no change in the repo rate, investors will closely analyze the RBI’s commentary on inflation, liquidity, economic growth, and the future path of monetary policy.

A balanced or dovish tone could provide relief to banking stocks, whereas a more hawkish stance may keep pressure on the sector in the short term. Longer-term performance, however, will continue to depend on credit growth, asset quality, deposit mobilization, and the broader economic environment.

 

Disclaimer: The stocks and market-related information mentioned in this article are provided solely for informational and educational purposes. They should not be construed as investment advice or a recommendation to buy or sell any security. Investors are advised to conduct their own research and consult a qualified financial advisor before making investment decisions. Investments in the securities market are subject to market risks. Please read all offer documents carefully before investing.