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PSU bank stocks rally on cheap valuation, Q4 boost; will the momentum last?

Despite private banks performing strongly in 2025 so far, the last three months have seen a sharp reversal, with PSU banks taking the lead.

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In Q4FY25, PSU banks decisively outperformed their private peers across most key financial parameters. Net profit for PSU banks rose 8.8% Q-o-Q, while private banks saw a 1.1% decline

Tanmay Tiwary New Delhi
Despite lagging behind in calendar year 2024 — with the Nifty Private Bank Index slipping 0.3 per cent, while the Nifty PSU Bank Index surged 13.61 per cent — private sector banks have outpaced their public sector counterparts so far in 2025 (as of June 3).
 
The Nifty Private Bank Index has delivered a gain of 10.35 per cent in CY25, outperforming the Nifty PSU Bank Index which rose 8.30 per cent in the same period. By comparison, the Nifty50 gained 3.79 per cent during the same period.
 
Individually, Kotak Mahindra Bank gained 14.7 per cent, ICICI Bank zoomed 11.6