Optimism on PSU banks justified, but selectively

Brokerages bullish on SBI, PNB & BoB, though some feel rally may subside as earnings take centre stage

In an extended Diwali party for public sector banks (PSBs), the mega-bailout announced by the government on Tuesday pushed their stocks to record the biggest single-day gain on Wednesday. 

Big or small, the entire pack was buzzing with gains ranging between 18 per cent and 41 per cent. While giants such as the State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB) spiralled 27-41 per cent, smaller peers such as Canara Bank, Bank of India, Union Bank, Indian Bank, Allahabad Bank and IDBI Bank jumped 20-35 per cent. In all, 22 PSU banks saw their