A quarter of a million Mexicans gathered beneath the balcony of the National Palace here today to applaud President Jose Lopez Portillo's surprise decision to nationalize Mexico's private banks.

In the midst of the worst economic crisis that this country has faced in modern history, workers were encouraged to leave their factories, fields or offices to turn out in Constitution Plaza. Flags were everywhere, and after an hour of nationalistic speeches, the president seized one of the green, white and orange banners to wave above the masses of oil workers and bureaucrats, cab drivers and communal farmers brought into the square by the state-controlled unions.

To entertain the crowd, mariachis sang new lyrics to the tune of "La Cucaracha" about bankers who no longer have banks "for exploiting."

Labor and the leftist opposition parties clearly support the nationalization and exchange controls decreed after Mexico's growing debt and capital flight brought a drastic devaluation of the peso. But criticism from private business leaders is growing stronger and increasingly bitter.

Further undermining the much-needed faith of the country's private sector, it appears that the government's key economic institution, the Bank of Mexico, has been shaken and reshaped by the president's recent moves.

In a full-page advertisement that appeared in several morning papers, the Business Coordinating Council denounced the expropriation of the banks as "a definitive step toward state control of the nation's economic life, toward state ownership that equals inefficiency, growing bureaucracy, corruption and the threat of totalitarianism. . . . State ownership of the banks is a definitive blow to private business activity and a clear signal of the country's entrance into socialism."

It first appeared that the measures might be political window dressing to appease the left before conservative economic austerity measures are taken to gain support from the world financial community. Now, however, there is growing concern that the actions in fact may be the substance of Lopez Portillo's new policy.

When the nationalization and exchange control decrees were published Wednesday afternoon, many people were surprised to see that the signature of the Central Bank director no longer was that of the basically conservative Miguel Mancera, who had held the post since February, but of Carlos Tello.

Tello had been planning and budget director in the first year of Lopez Portillo's term, finally turning in an angry and public resignation claiming that his work was hampered by a 1976 agreement with the International Monetary Fund. Tello is a close associate of Industrial Development Minister Jose Andres Oteyza, who is widely considered the mastermind of the government's free-spending policies. Conservatives see both men as enemies of private enterprise, and the fact that one of them now is in charge of the central bank has sent shivers through the city's financial community.

Tello was quoted in today's newspapers reassuring reporters that the country was in no way on the path to socialism, but as one diplomat put it, Tello's appointment is "a signal, to put it mildly. It sort of looks like Lopez Portillo took a real sharp turn to the left, and it would seem to place the negotiations between Mexico and the IMF in a strange context."

Meanwhile, the extent to which the nationalization of the banks simultaneously resulted in the nationalization of many industries remains an open but important question. Some reports suggest that 30 percent or more of private industry was in the hands of the banks and thus will now be owned by the government.