Banking & Financials To Outperform In 2026: HDFC Bank, SBI Top Picks

Banking and financial services could emerge as the top-performing sector in 2026, according to market expert views. The sector, often called the “mother of all sectors”, is backed by attractive valuations, strong government support and rising liquidity, setting the stage for faster credit growth. Housing finance, credit cards and digital lending are expected to drive momentum over both the short and long term. The strategy suggests allocating 15–20 per cent of a fresh portfolio to banking stocks. Among top picks, SBI stands out for its unmatched reach across India, supporting long-term earnings growth, while HDFC Bank is seen benefiting from a housing boom in 2026–27, improving asset quality. One-year targets of around ₹1,100–1,120 are projected for both stocks, with defined stop-loss levels.