Furthermore, he is optimistic the npower Championship club can cope with their demanding schedule.
Blues set up an FA Cup fourth round meeting with Sheffield United with their shock 1-01 replay win at Wolves through Wade Elliott's goal in what was their 36th game of the campaign.
Hughton took charge last summer with the club in turmoil after relegation, manager Alex McLeish's move to Aston Villa and the departure of most of their Carling Cup winning team.
But City have stabilised under Hughton, impressed in the Europa League and are now on the fringe of the promotion play-offs after a seven-game unbeaten run.
Centre-back Davies said: "The gaffer instils a lot of confidence in the lads and hopefully it is starting to show on the pitch.
"It's been so long now since what happened in the summer that we've been able to put it behind us, everyone going.
"The players all went, they are all doing their own thing now, and we've become a different Blues team in our own right.
"The gaffer knew the free transfers we had got in were good signings, and the couple we bought like Wade Elliott.
"He believed that within those players we had enough people with Premier League experience to hopefully go up. That's the aim."
Davies, who impressed against Wolves, added: "I know what people were saying at the start of the season when we lost all the players we did.
"But I believe the squad we've got now is good enough to get up.
"We are starting to get a bit of momentum and, looking at the table now, it is a realistic table.
"We are in and amongst it and still have a game in hand. We are there or thereabouts now and can start to put pressure on the other teams."
Birmingham will play a minimum of 58 games this season and the number will increase if they qualify for the play-offs or have more FA Cup success.
But Davies believes he is benefiting from playing regular football and insists no one wants to be rested.
He said: "The gaffer rested a couple at Wolves but I didn't want to get rested because, once you are doing well, you want to keep that momentum going.
"Even if something has gone wrong in the previous game, you want to put it right in the next one, not rest.
"Sometimes I feel fitter for playing the games than playing a couple and missing out on one.
"No one wants to come out of the side because when you are doing well, you want to keep it going and we showed we could cope with the Europa League."