Public sector bank stocks, including SBI, Bank of Maharashtra share and Indian Bank, have gained momentum following a strong recovery in the broader market. The Nifty PSU Bank index jumped nearly 4% in the previous session, recording its biggest single-day rise in almost two years.
All 12 stocks in the index ended in positive territory. Union Bank of India, Punjab National Bank, Bank of India and Bank of Baroda led the gains, rising between 0.7% and 5.6%.
Since late October, PSU banking shares have recovered around 12% from their recent lows. Strong September-quarter earnings, improved asset quality, healthy credit growth and higher interest income have boosted investor confidence.
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FPI Buying Adds Strength to the Rally
Renewed buying by foreign portfolio investors (FPIs) has provided additional support. Their investments helped push the Nifty PSU Bank index to its highest level since April.
According to NSDL data, FPIs invested ₹53,739 crore in Indian equities during November so far. The shift towards Indian markets comes amid weakness in global AI-related stocks and concerns over possible restrictions on data centre expansion in the US.
Seven PSU Bank Stocks Rebound Sharply
The recent recovery has helped several public sector lenders climb significantly from their 52-week lows. Bank of Maharashtra topped the list with a rebound of approximately 58%.
Union Bank of India, Punjab National Bank, Indian Bank, Bank of India and Bank of Baroda also recovered between 16% and 34%.
Meanwhile, Punjab & Sind Bank, UCO Bank, Canara Bank, State Bank of India, Central Bank of India and Indian Overseas Bank gained between 10% and 15% from their respective yearly lows.
PSU Banks Report Strong Q2 FY27 Earnings
Public sector banks delivered an impressive financial performance in the September quarter of FY27. Collectively, they reported net profits of ₹59,367 crore, representing 20% year-on-year growth. This figure was also higher than the combined ₹57,095 crore profit reported by private sector banks.
Their net interest income (NII) increased 15.9% year-on-year, slightly ahead of the 15.1% growth recorded by private lenders.
Other income rose 4.2% to ₹51,669 crore compared with the same quarter last year. It also increased 11.2% sequentially.
Furthermore, net interest margins (NIMs) improved by 15 basis points year-on-year to 2.58%. Higher lending yields compared with funding costs helped banks maintain their margins.
Overall, improving earnings, stronger asset quality and renewed foreign investor interest have supported the PSU banking rally. However, investors should assess valuations, asset quality and future earnings before making investment decisions.
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Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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