Axis Bank Share Price Chart (Last 5 years)
Introduction
Here's an analysis of the factors affecting Axis Bank's stock price.
The Indian banking sector is a key part of the economy. Recent fluctuations in bank stock prices have sparked questions about their causes. In about last 3 weeks (between 26-June and 18-July-2025), the Axis Bank's share price has fallen by 10%.
Now, the question is, are these drops temporary, or are there more serious underlying issues? What should long-term investors do? To read it, jump here.
But before that's let's investigate if the reason is hidden in the macro indicators. If you want to go straight to the main reasons causing the Axis Bank share dip, jump here.
Macro Indicators and the Banking Sector
Banks are fundamental to the economy.
They provide loans to businesses and individuals, which promotes growth and consumption.
The health of the economy generally reflects in the performance of banks. I'll suggest you to read this article on how the economy works.
Several macro indicators influence bank stock prices:
- Economic Growth: Economic health is positive for banks. When the GDP grows, businesses expand and take out more loans. Consumers also spend more, using credit cards and loans. This boosts bank profits. Currently, the GDP is growing steadily at around 6.5% and is also expected to continue. Read about distorted GDP per capita of tax heavens.
- Interest Rates: The RBI sets these rates, and they have a major impact. When rates rise, borrowing becomes more expensive. This can slow loan growth and impact bank profits. However, higher rates also mean banks can earn more on the loans they give out. Recently, the RBI has been cutting rates to boost growth. This can squeeze bank margins but also encourage more borrowing and spending.
- Inflation: Rising prices affect everyone. Higher inflation can lead to higher interest rates. This can impact consumer spending and business investments. High inflation also erodes the real value of loans and deposits. This means banks need to manage their costs carefully. Currently, inflation is under control, which is a good sign for the banking sector. According to Axis Bank, the RBI aims for 4% inflation (with a 2% leeway on both sides). Read about dosa economics to get insights about inflation.
- Asset Quality: This refers to the number of loans that become bad debts, also known as NPAs. When NPAs increase, banks must set aside more money. This hurts profits. As reported recently, the Gross NPA ratio of Scheduled Commercial Banks (SCBs) declined to a 13-year low of 2.5% in September 2024. It is down from 2.7% in March 2024. Recently, NPAs have been declining in the banking sector. But some areas of stress remain, especially in retail loans. Read about the concept of bad bank.
- Government Policies: Government policies can support the banking sector. For example, financial inclusion initiatives like Jan Dhan Yojana have boosted the number of bank accounts. This increases the deposit base for banks. Also, policies aimed at infrastructure development create demand for loans. Regulations aimed at controlling lending can impact credit growth.
The government has introduced various measures to promote financial inclusion and support small businesses. Smaller entities like payment banks and small finance banks are a step in this direction.
Why Axis Bank Stock Price Is Falling?
Axis Bank's share price dropped ~10% from June 26 to July 29, 2025, while HDFC Bank and ICICI Bank remained stable. Key Axis-specific reasons for the decline:
- Weak Q1 FY26 Results: Axis reported a 4% YoY net profit drop to Rs.5,806 crore. It missed analyst expectations due to higher provisions (Rs.3,948 crore vs. Rs.1,359 crore QoQ). The deteriorating asset quality is the roots of the current problems of Axis Bank. It's gross NPA is at 1.57% vs. 1.28% QoQ. There are fresh slippages up 71% to Rs.8,200 crore. This means new loans that Axis Bank expected to be repaid but turned NPA increased by 71% compared to the previous period, reaching Rs.8,200 crore.
- Rising Slippages in Retail: More retail loans, especially unsecured ones like personal loans or credit cards, are not being repaid, worrying investors. Unlike HDFC and ICICI, Axis is struggling to quickly improve the quality of its loans.
- Slower Loan and Deposit Growth: Axis's loan growth (8% YoY) and deposit growth (9% YoY) lagged industry averages and peers like ICICI (15% loan growth) and HDFC (13% deposit growth). It is a signal of operational weakness.
HDFC and ICICI maintained stable performance with stronger NII growth and better asset quality management, cushioning their shares from similar pressure.
What Should a Long-Term Investor Do?
Long-term investors should consider these points:
- Focus on Fundamentals: Consider the long-term prospects of the banking sector. Economic growth, asset quality, and government policies are key factors. A strong economy and well-managed banks should perform well over time.
- Stay Invested: Market corrections are normal, and timing the market is difficult. Staying invested and riding out volatility is often better. Long-term wealth creation takes many years. I suggest you to read this post of buy and hold investing - Explained.
- Diversify: Investing across different sectors and asset classes reduces overall risk.
Patience is Key. Building wealth takes time. Don't panic sell during market corrections. Focus on long-term goals and stay patient. I personally see Axis Bank as a quality bet for long term investors.
For sure, it is not as risk free as HDFC, ICICI, and SBI. But people who do not want to invest in these three, I think the next best long term bet will be Axis Bank and Kotak Mahindra Bank. Not a recommendation, just my thought.
Conclusion
The Indian banking sector is a vital part of the economy.
Macro indicators like economic growth, interest rates, inflation, and asset quality shape its performance.
While temporary dips in stock prices are normal, longer-term trends should be considered. In case of Axis Bank, the deteriorating asset quality has caused its share price to fall sharply. If you want to learn how to analyze bank stocks, read this post.
Long-term investors should focus on fundamentals, stay invested, and diversify.
A long-term perspective and patience are valuable in the stock market.
Have a Happy Investing.
