SBI, Canara, Indian Bank hit 52-wk highs; PSU Bank index up 1%; here's why

Share price movement of public sector banks today

 

Shares of public sector banks (PSBs) were in focus, with State Bank of India (SBI), Canara Bank and Indian Bank hitting their respective 52-week highs on the National Stock Exchange (NSE) in Wednesday’s intra-day trade in an otherwise weak market.

 

At 10:07 AM; the Nifty PSU Bank index, was the top gainer among sectoral indices, up 1.2 per cent, as compared to 0.25 per cent decline in the Nifty 50. The PSU Bank index hit an intra-day high of 7,543.50, its highest level since June 19, 2024.  The Nifty PSU Bank index had hit a record high of 8,053.30 on June 3, 2024.

 

Among individual stocks, SBI hit a 52-week high of ₹880.50, gaining 1 per cent on the NSE in intra-day trade.  The bank surpassed its previous high of ₹875.50 touched on December 6, 2024. Shares of SBI are seen inching towards its all-time high of ₹912.10, hit on June 6, 2024.

 

Indian Bank hit a new high of ₹716.80, surging 3 per cent in intra-day trade, while Canara Bank was up 2 per cent to hit a 52-week high of ₹124.35 on the NSE. Bank of Baroda and Punjab National Bank, up 1 per cent each, were also quoting close to their respective 52-week highs.  FOLLOW STOCK MARKET LIVE UPDATES

Why are PSU bank shares outperforming the market?

 

In the past one month, the Nifty PSU Bank index has outperformed the market by surging 8 per cent, as compared to less than 1 per cent rise in the Nifty 50.

 

As per media reports, India is considering raising the foreign investment limit in public sector banks (PSBs) from 20 per cent to attract more capital while retaining a minimum 51 per cent government stake. Policymakers believe this reform can strengthen PSBs into globally competitive institutions as part of the Viksit Bharat 2047 vision. 

 

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.

 

While a decision on such relaxation is awaited, this could aid diversification in access to capital and valuation, ICICI Securities said in a note.

 

In another development, liquidity in the banking system turned negative this week as tax outflows of ₹2.5–3.0 trillion, including GST and advance taxes, pulled funds out of the system, leaving a deficit of about ₹32,000 crore. The strain pushed overnight rates above the 5.5 per cent repo rate, prompting the Reserve Bank of India (RBI) to step in with two ₹1 trillion VRR (variable rate repo) auctions to calm markets.

 

Liquidity recovery is expected by month-end as government spending picks up, supported by ₹60,000 crore cash reserve ratio (CRR) cut infusion and ₹72,000 crore from bond maturities, ICICI Securities said.   

Currently, PSBs are relatively better placed than PVBs on available liquidity, according to analysts at Systematix Institutional Equities.

 

Despite the US tariff impositions having disrupted exports, CRISIL expects advances for the banking sector to grow at 11 per cent to 12 per cent in FY26. Systematix Institutional Equities said its comfort on advances growth comes from RBI’s efforts to improve liquidity in the system and central government’s measures to enhance economic growth. 

 

Meanwhile, PSBs are faring well on new NPA flows, with their annualized gross slippage ratios in control. Given public sector banks’ steadily improving operational parameters and in many aspects becoming at par or even better to private sector banks we see a long-term structural trend building up for PSBs. Given their discount in valuation as compared to private peers there seems to be a strong possibility of re-rating, the brokerage firm said in the banking sector report.