Nifty PSU Bank index hits new high, rallies 21% since October on FPI buying

Since October 2025, Bank of India, Union Bank of India and Canara Bank have surged between 29 - 34 per cent. FPIs have increased stake in select PSU Banks by up to 3 per centage points.

Nifty PSU Bank Index today

 

Shares of public sector banks (PSBs) were in demand, with the Nifty PSU Bank index hitting a new high at 9,093.65 on the National Stock Exchange (NSE) in Tuesday’s intra-day deals in an otherwise weak market.

 

At 09:24 AM; the Nifty PSU Bank index was up 0.7 per cent, as compared to 0.27 per cent decline in the Nifty 50. 

 

Since October 2025, the Nifty PSU Bank index has outperformed the market by zooming 21 per cent on foreign portfolio investors (FPIs) buying. In comparison, the Nifty 50 was up 3.7 per cent during the same period.

 

 

Bank of India, Union Bank of India and Canara Bank share prices appreciated between 29 per cent and 34 per cent during the period. State Bank of India (SBI), Bank of Maharashtra, Bank of Baroda (BoB), Indian Bank and Punjab National Bank were up in the range of 15 per cent to 20 per cent.  CATCH STOCK MARKET UPDATES TODAY LIVE

FPIs increases stake in PSBs in December 2025 quarter

 

FPIs have raised their holdings in PSBs by up to 3 percentage points during the October to December 2025 (Q3FY26) quarter, the shareholding pattern data shows.

 

In Canara Bank, FPIs stake increased 2.7 percentage points to 14.6 per cent from 11.9 per cent at the end of September 2025 quarter (Q2FY26).  In Bank of Baroda (9.84 per cent) and in Bank of India (5.8 per cent), FPIs raise their holding by 1.1 percentage and 1.6 percentage points, respectively.

 

FPIs holding in PSB giant SBI (10.3 per cent) and Indian Bank (5.6 per cent) increased by nearly 1 percentage points each. Their stake in Union Bank of India, Punjab National Bank (PNB) and Bank of Maharashtra increased by 0.2 percentage points each, data shows.  ALSO READ | Analysts bullish on L&T Finance amid strong Q3 growth, profitability gains

Motilal Oswal Financial Services view on PSU banks

 

PSU banks have seen a slight FY26E earnings upgrade of 7 per cent/3 per cent over 3 months/12 months. Canara/Indian/Union Bank have seen an upgrade of 12 per cent/10 per cent/8 per cent for FY26E, while SBI’s earnings estimates remained unchanged. PNB/BoB have seen a cut of 6 per cent/1 per cent in the past 12 months. 

 

Motilal Oswal Financial Services (MOFSL) estimates PSU banks’ profit after tax (PAT) to grow by 5.8 per cent YoY (3.8 per cent QoQ) in Q3FY26E amid flat to marginal decline in NIMs, modest treasury gains and stable asset quality trends. The brokerage firm estimates 11.3 per cent compound annual growth rate (CAGR) in earnings over FY26-28E after earnings bottom out at 6 per cent YoY in FY26E.

 

Buoyed by resilient margin performance and improved asset quality, MOFSL in the financial sector update said that they earlier raised their aggregate FY26/27 earnings estimates by 3 per cent/1 per cent in Q2FY26 results, mainly led by PSU banks, and have further maintained estimates in the Q3FY26 preview. For PSBs like Canara (+2 per cent) and PNB (+17 per cent), MOFSL said their Q3 earnings estimates stand higher than consensus.  =============================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.