Nifty PSU Bank index rallies 2%, SBI stock nears record high; here's why

SBI, Uco Bank, Punjab & Sind Bank, Indian Overseas Bank, Central Bank of India, PNB and Canara Bank were up in the range of 2 per cent to 5 per cent in Friday's intra-day trade.

PSU Bank shares price movement today

 

Shares of public sector banks (PSBs) were in demand, with the Nifty PSU Bank index hitting a fresh 52-week high at 7,719.95, surging 2 per cent on the National Stock Exchange (NSE) in Friday’s intra-day trade.

 

At 10:38 AM; the Nifty PSU Bank index, was the top gainer among sectoral indices, up 1.7 per cent, as compared to 0.35 per cent rise in the Nifty 50. The PSU Bank index was trading at its highest level since June 4, 2024. The index had hit a record high of 8,053.30 on June 3, 2024. Since September, the Nifty PSU Bank index has surged 14 per cent.

 

State Bank of India (SBI), Uco Bank, Punjab & Sind Bank, Indian Overseas Bank, Central Bank of India, Punjab National Bank (PNB) and Canara Bank were up in the range of 2 per cent to 5 per cent.

 

Among individual stocks, SBI shares hit a new 52-week high at ₹883.30, and rallied 2.5 per cent on the NSE in today's intra-day trade. The stock price of SBI was seen inching towards its all-time high of ₹912.10, which it hit on June 6, 2024. Besides SBI, Indian Bank and PNB also hit their respective 52-week highs on the NSE

Why PSU banks are in focus?

 

Shares of SBI hit a fresh 52-week high today on reports that the government has opened up the PSU lender managing director position to the private sector.

 

As per media reports, the government for the first time opened the doors for private-sector talent to take up a Managing Director role at SBI, with the first vacancy likely in January 2026 when Ashwini Kumar Tewari’s term ends. 

 

Under the new rules cleared by the Appointments Committee of the Cabinet, candidates must have at least 21 years of experience, including 15 in banking, along with board-level or senior leadership exposure. The Financial Services Institutions Bureau (FSIB) has also been empowered to run behavioural and competency assessments, signalling a push to bring speed, transparency, and stronger leadership into PSBs and insurers.

 

Meanwhile, once considered aspirational, PSBs have achieved a structural turnaround, with sector RoA reaching ~1.1 per cent in FY25, supported by improved underwriting, cost control, and robust recoveries. Aggregate PSB profits have surged to ₹ 1.5 trillion in FY25, with their share in banking profits rebounding to 48 per cent.

 

PSBs’ market cap has jumped nearly 5x since FY20, yet they continue to trade at reasonable valuations even as sector RoE remains stable at 18-19 per cent and RoA at 1 per cent. With their strong balance sheets, healthy asset quality, and improving efficiency, analysts at Motilal Oswal Financial Services see scope for a gradual but meaningful re-rating for PSBs. 

 

PSBs have shown strong improvement, with gross NPAs falling to 2.58 per cent in March 2025 from 9.11 per cent in March 2021, net profit rising to ₹1.78 trillion from ₹1.04 trillion, and dividend payouts increasing to ₹34,990 crore from ₹20,964 crore.

 

PSBs have seen a strong re-rating over the past five years, shedding their legacy image of lenders with poorer underwriting capabilities to competitive players delivering consistent value to stakeholders. While near-term earnings may face margin pressures, structural improvements in asset quality, capital strength, digital adoption, and operating efficiency offer visibility on sustaining this RoA, according to Motilal Oswal Financial Services.

 

The brokerage firm further said PSBs are well positioned to benefit from any capex recovery, though near-term growth will continue to be funded by RAM assets. Stronger capital positions, cleaner balance sheets, and prudent provisioning make PSBs more resilient and limit cyclicality in earnings and asset quality relative to past cycles.