In the current market, banking stocks are getting attention as potential outperformers. According to a recent Economic Times analysis, there are ten banking stocks which analysts believe could deliver more than 26% returns over the next year.

Key factors supporting this bullish view include weaker valuations compared to their peers, improving margins especially in the private banking sector, healthy loan growth, and a wave of expected consolidation in the PSU (public sector) banking space. The government’s drive to build “global-sized” banks via mergers is also considered a catalyst.

However, some caveats are also mentioned: rising credit risk, interest rate volatility, and regulatory changes could affect performance. Also, although private banks have performed better recently, many are seen as having already priced in significant growth, meaning the margin of safety may be narrower than for some PSU banks.

For investors, this view suggests that bank shares are no longer just a defensive bet but may participate strongly in any broad market uptrend if the big risks are managed. Always important: check individual bank fundamentals (asset quality, capital adequacy, management) before acting.