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Shares of state-owned banks such as SBI, Bank of Maharashtra, and Indian Bank have been flying high lately as Dalal Street staged a strong rebound. In the previous session, the Nifty PSU Bank index surged nearly 4%, marking its biggest single-day gain in almost two years.
Union Bank of India, Punjab National Bank, Bank of India, and Bank of Baroda emerged as the top gainers, with all 12 constituents of the index closing higher, posting gains ranging between 0.7% and 5.6%.
To be precise, PSU bank stocks have been in recovery mode since late October, gaining around 12% from their recent lows.
Investors have been encouraged by the sector's strong performance in the September quarter, with banks reporting healthy credit growth, improving asset quality, robust interest income growth, and a reduction in overall non-performing assets.
In addition, the return of overseas investors has also supported the rally, pushing the Nifty PSU Bank index to its highest level since April.
FPIs have pumped ₹53,739 crore into domestic stocks in November so far, according to NSDL data. The shift in sentiment towards Asia's third-largest economy comes amid a correction in global AI-linked stocks.
Concerns over potential moves by the US Congress, now led by Democrats, to impose restrictions on the massive expansion of data centres have also contributed to a rotation away from AI-linked stocks.
The recent rally has helped most PSU bank stocks recover sharply from their respective 52-week lows, with Bank of Maharashtra leading the pack with a 58% rebound.
It was followed by Union Bank of India, Punjab National Bank, Indian Bank, Bank of India, and Bank of Baroda, which have also rebounded between 16% and 34% from their respective one-year lows.
Other stocks, including Punjab & Sind Bank, UCO Bank, Canara Bank, State Bank of India, Central Bank of India, and Indian Overseas Bank, have recovered between 10% and 15% from their respective 52-week lows.
In terms of financial performance, PSU banks reported aggregate net profits of ₹59,367 crore in Q2 FY27, marking a 20% year-on-year (YoY) increase and slightly surpassing the combined net profit of private sector lenders, which stood at ₹57,095 crore.
Their net interest income (NII) grew 15.9% YoY, marginally outpacing the 15.1% growth recorded by private banks. Other income rose 4.2% YoY to ₹51,669 crore while also registering an 11.2% sequential increase. Net interest margins (NIMs) showed greater resilience, expanding by 15 basis points YoY to 2.58%, as lending yields increased faster than funding costs.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments. <br><br> He has over a decade of experience in the financial services industry and has previously worked with multiple organisations, including global investment bank J.P. Morgan, bringing strong research experience into the newsroom. <br><br> During his career, he has gained extensive exposure to equity research, market analysis, and financial data interpretation, strengthening his expertise across asset classes and market cycles. <br><br> He is known for his data-driven analysis and crisp, listicle-style market stories that break down complex financial developments across key markets for a wide audience. His strong research skills enable him to write detailed and insightful stories on stocks and sectors, focusing on the underlying factors driving market movements. <br><br> His work combines quantitative insights with clear storytelling, presenting financial developments in a clear and structured manner. Moreover, he enjoys writing multibagger and listicle-style copies. Outside of work, Ksheera enjoys playing the piano and exploring new places. He has a keen interest in travel, music, and continuously learning about global markets and economic trends.
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