Nifty PSU Bank index at new high; up 27% in 3 months; what's driving PSBs?

Nifty PSU Bank index hit a new high at 8,665.70, in Wednesday's intra-day trade, surpassing its previous high of 8,624.80 touched on Nov 20, 2025. The index has gained 4% in the past two trading days.

Public sector banks (PSBs) price movement today

 

Shares of public sector banks (PSBs) extended their rally, with the Nifty PSU Bank index hitting a new high of 8,665.70, gaining 2 per cent on the National Stock Exchange (NSE) in Wednesday’s intra-day trade. 

 

The PSU Bank index surpassed its previous high of 8,624.80 touched on November 20, 2025. In the past two trading days, the index has surged nearly 4 per cent. In the past three months, Nifty PSU Bank index has zoomed 27 per cent, as compared to 5.6 per cent rise in the Nifty 50.

 

Among individual stocks, State Bank India (SBI) hit a new high of ₹999, up 1 per cent on the NSE in intra-day trade. Bank of India (₹151.43) and Canara Bank (₹152.50) were up 3 per cent each, hitting their respective multi-year highs in intra-day trade.

 

Punjab & Sind Bank, Uco Bank, Indian Overseas Bank, Central Bank of India, Union Bank of India, Punjab National Bank, Indian Bank and Bank of Baroda were up in the range of 2 per cent to 3 per cent.  READ LATEST STOCK MARKET UPDATES TODAY LIVE

What’s driving public sector banks?

 

Public sector banks have expanded their market share in the competitive home loan market to 50 per cent of total originations by value in September, a report said on Monday. The state-run banks have overtaken private sector banks in the market, PTI reported quoting the report by Crif High Mark.

 

"PSU banks have expanded their market leadership in both value and reach, and regulatory discipline is encouraging more responsible and broad-based financial inclusion across geographies and population segments," Crif High Mark's chairman Sachin Seth said.

 

From an asset quality perspective, there has been an improvement in the proportion of consumption loans overdue for between 31-180 days to 3 per cent in September from 3.1 per cent in June and 3.3 per cent in the year-ago period, it added.

 

According to another media report, India’s private-sector banks are set to lose credit market share for a second straight year in FY26 as their loan growth of 8.9 per cent in FY25 and 9.9 per cent in H1FY26 trails the 11–12 per cent expansion of the overall banking system.  ALSO READ | MCX shares cross ₹10,000-mark; zoom 130% from March low; upside left? 

Over the last few years, large private banks have underperformed state-owned enterprise (SOE) peers owing to concerns around asset quality in unsecured segments as well as lagging earnings growth/moderating profitability, said analysts at InCred Equities.

 

Meanwhile, the Reserve Bank of India (RBI) Governor Sanjay Malhotra has reaffirmed that there remains room for further policy rate cuts, as signaled during the October Monetary Policy Committee (MPC) meeting. He said the latest macroeconomic indicators, including inflation trends, show no signs of reducing that scope. However, he clarified that the final decision on whether to cut rates in the upcoming December policy review will depend on the MPC’s assessment at that time.

 

While an impending rate cut may exert some pressure on banks’ net interest margins (NIMs) in the near term, the impact is expected to be largely mitigated by ongoing deposit repricing and the full flow-through of cash reserve ratio (CRR) reduction benefits into system liquidity. With credit momentum improving and funding costs gradually easing, the overall profitability outlook remains stable, ICICI Securities said in a note.

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