Shares of PSU banks gained more than 3% in early trading on Friday, with the Nifty PSU Bank index rising over 1% to ₹9,603.5 at 10:47 am.
The gains were led by Union Bank of India, Indian Bank and Punjab National Bank (PNB).
At 10:43 am, shares of Union Bank of India were trading 1.87% higher at ₹193 on the BSE. The stock hit a high of ₹193.95 apiece after rising 2.37% in early trading.
Shares of Indian Bank rallied 2.18% to ₹946.45, while PNB gained 1.27% at ₹127.85. The State Bank of India (SBI) shares were trading flat at ₹1,208.5 apiece. IDBI Bank was trading 3.12% higher at ₹113.99, while Bank of Maharashtra was 1.28% up to ₹68.84.
Fuelled by strong loan growth, historically low levels of bad assets and record earnings, shares of public sector banks have emerged as one of the preferred segments for stock market investors in recent months.
Over the past six months, the combined market capitalisation of India’s 12 PSU banks has jumped by ₹5.75 lakh crore to ₹21.35 lakh crore, driven by a valuation re-rating that has eluded private sector lenders.
The rally has been reflected in benchmark indices, with the Nifty PSU Bank Index rising nearly 35% in the last six months.
Public sector banks maintained a strong lending momentum in the third quarter, recording year-on-year credit growth of more than 14.5%, driven largely by retail and SME demand, with support from wholesale lending. By contrast, private sector lenders reported growth of under 12%.
On a quarter-on-quarter basis, PSU banks expanded their loan books by about 5.5%, compared with roughly 3.5% for private peers. State Bank of India raised its credit growth outlook to a range of 13–15%. Growth rates stood at 20% for Bank of Maharashtra and 16.74% for UCO Bank, while Indian Overseas Bank led all banks with 24.13%.
