Nifty PSU Bank index rallies 3% in 2 days; Indian Bank hits all-time high

PSU Bank stocks gained up to 2% in trade on Thursday; Nifty PSU Bank index hit an intra-day high of 7,142.25, and was 2.3 per cent away from its 52-week high of 7,304.80 touched on July 17, 2025.

PSU Bank shares today

Shares of public sector banks (PSBs) were trading higher for the second straight day, with the Nifty PSU Bank index gaining 3 per cent in the past two days on expectations of healthy credit growth.

 

At 11:03 AM; the Nifty PSU Bank index was up 1.3 per cent, as compared to 0.06 per cent rise in Nifty 50. In the past two trading days, it has rallied 3.4 per cent, as against 0.5 per cent gain in the benchmark index. Nifty PSU Bank index hit an intra-day high of 7,142.25, and was 2.3 per cent away from its 52-week high of 7,304.80 touched on July 17, 2025.

 

Uco Bank, Punjab National Bank, Canara Bank, Central Bank of India, Union Bank of India, Bank of Maharashtra and Bank of India were up in the range of 1 per cent to 2 per cent on the National Stock Exchange (NSE) in Thursday’s intra-day trade.

 

Shares of Indian Bank hit a new high of ₹701.85 on the NSE. In the past two trading days, the stock has rallied 5 per cent. The stock price of PSU bank giant, State Bank of India (SBI) has gained 2 per cent in two days.  FOLLOW STOCK MARKET LIVE UPDATES 

ICICI Securities has ‘Buy’ rating on SBI with a target price of ₹940, valuing standalone bank at ~1.1x and ₹275 for subsidiaries. 

 

Steady performance despite headwinds showcases resilience. Business growth with focus on RAM segment with relatively resilient margins aided by diversified loan mix and consistent strong asset quality reinforce robust operating profile. Recent capital raising induces confidence, while treasury gains remain a catalyst, the brokerage firm said.

PSBs outpace PVBs in credit offtake

 

Meanwhile, the credit offtake of PSBs continued to outpace private sector banks (PVBs) since the last three quarters, as PSBs had greater headroom for lending with stable credit-to-deposit (CD) ratios as compared to PVB, according to Care Edge Ratings.

 

PSBs have gained market share by 55 bps year-on-year (YoY), reaching 53.8 per cent in June 2025 quarter (Q1FY26) outpacing PVBs in credit growth during Q1FY26, which reduced their market share by 58 bps YoY. This outperformance of PSBs could be attributed to the stable CD ratios of PSBs compared to PVBs, which enabled them to have greater lending headroom. Additionally, PSBs have strengthened their position in the retail, agriculture and the MSME segments, the rating agency said.

 

From March 20, PSBs led in deposit mobilisation, with their deposit base rising by ₹47.5 trillion, marginally higher than the ₹42.4 trillion increase recorded by PVBs. PSBs continued to benefit from their wider branch network and inflows from various government schemes.  ALSO READ | Motilal Oswal bullish on luggage sector; initiates 'Buy' on VIP Ind, Safari 

On August 14, 2025, S&P Global Ratings upgraded the issuer credit ratings of 10 financial institutions including SBI, Union Bank of India and Indian Bank by one notch each due to likely improvement in their risk adjusted capital (RAC) ratios. The gains will be driven by fresh capital raising or benefits from lower risk weights due to a reduction in economic risk and the sovereign upgrade, the global rating agency said.

 

In S&P Global Ratings view, some of the factors benefiting the sovereign's creditworthiness will have a positive effect on operating conditions for financial institutions in India. In particular, infrastructure spending will likely pave the way for robust economic growth, which will support banks' asset quality.

 

The asset quality of Indian banks will remain healthy. This reflects structural improvements in operating conditions and good economic prospects. The rating agency believes underwriting standards for secured retail loans are healthy in the Indian banking system, and delinquencies will remain manageable. Tightening regulations and stricter guardrails in microfinance should also contain asset-quality strains.