&w=3840&q=100)
PSU bank stocks rally on cheap valuation, Q4 boost; will the momentum last?
premium
Tanmay Tiwary New Delhi
Listen to This Article
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
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
10 minutes ago
- Mint
PSU bank stocks outshine private peers in August rebound; Indian Bank, BOI, SBI rally up to 8%
While banking stocks staged a comeback in August after a July slump, it was public sector banks (PSBs) that managed to attract significant investor interest, not only outperforming their private peers but also beating the benchmark indices. The Nifty PSU Bank index, which tracks 12 PSBs, has gained 3.30% so far this month, outperforming the Nifty Private Bank index, which declined 0.40%. This performance also surpassed the Nifty 50's 1.27% gain in August. Individually, Indian Bank shares rose 8%, while those of Bank of India and SBI, each gaining 4% in August so far. The outperformance can be attributed to the healthy figures posted by PSBs in the June quarter, driven by expanding credit growth, mainly from higher lending in retail, agriculture, and MSME sectors, along with improving asset quality and rising treasury gains, which helped state-owned banks deliver strong performance in a quarter marked by falling net interest margins. Public sector banks outperformed private banks in key metrics in the June quarter, with PSBs reporting a credit rate growth of 11%, higher than the 8.1% of PVBs. The turnaround in PSBs began in FY25, when they outperformed private banks for the first time in 14 years, achieving loan growth of 13.1% YoY, outpacing PVBs' 9% growth. In terms of asset quality as well, PSBs reported improvements, while private banks faced a sharp rise in slippages. Slippages at private banks grew 41% YoY to ₹ 36,000 crore in Q1FY26, compared with 14.4% and ₹ 27,000 crore for PSBs. On credit costs, PSBs saw a 4.8% YoY decline to ₹ 0.16 lakh crore, whereas private banks reported a sharp 172.1% increase over the same period, according to CareEdge Rating data. The higher slippages by PVBs are due to their greater exposure to unsecured retail and microfinance segments. On the other hand, PSU banks continued to outperform on this front, owing to a more conservative lending approach and stronger performance from corporate borrowers. Amid improving asset quality and a significant jump in treasury income, PSBs' net profit soared to ₹ 44,218 crore, up 11% from ₹ 39,974 crore a year ago. Among PSBs, Indian Overseas Bank saw highest YoY growth in net profit, rising 75% to ₹ 1,111 crore. Punjab & Sind Bank follows by reporting a growth of 48% at ₹ 269 crore. Bank of Baroda and Canara Bank clocked a net profit of 2% and 22%, respectively. Global brokerage Bernstein, in its latest note, said, 'There is a real risk that PVBs face a period of prolonged slower growth, while PSBs continue to grow faster, albeit with structurally lower margins.' However, the brokerage also cautioned that this growth comes with risks. PSBs are offering very aggressive loan pricing to capture market share, which is weighing on their net interest income (NII) growth. Even though they are expanding loans faster and improving their loan-to-deposit ratio (LDR), their NII growth still lags behind PVBs. According to Bernstein, stronger return ratios (RoAs) for PSBs are currently being supported more by low credit costs and treasury gains rather than core operating performance. The report also recalled that nine months ago, it had expected the loan growth gap between PVBs and PSBs to reemerge once PSBs' excess liquidity was absorbed. That liquidity has now been fully utilized, yet PSBs' aggressive lending stance has intensified instead of easing. Bernstein's base case now is that PSBs will eventually scale back their aggression as the current tailwinds to RoAs—benign credit costs and treasury gains—begin to fade. If this does not happen, PVBs could face an extended phase of slower growth, while PSBs may continue to expand at a faster pace but with structurally weaker margins. Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Business Standard
28 minutes ago
- Business Standard
Sensex, Nifty extend winning streak to sixth day; pharma, healthcare stocks shine
Domestic equities eked out modest gains on Thursday, stretching their winning streak to a sixth straight session. Optimism over a potential cut in Goods and Services Tax (GST) supported sentiment, though caution lingered ahead of the US Federal Reserves annual symposium for cues on interest rate policy. The Nifty closed above the 25,050 mark, lifted by strength in pharma and healthcare counters, while FMCG, PSU bank and auto stocks dragged on the upside. The S&P BSE Sensex advanced 142.87 points or 0.17% to 82,000.71. The Nifty 50 index added 0.13 points or 0.33.20% to 25,083.75. In the six trading sessions, the Sensex and Nifty have jumped 2.19% and 2.43%, respectively. ICICI Bank (up 1.09%), Bajaj Finance (up 0.90%) and Reliance Industries (up 0.86%) boosted gains in the Nifty. In the broader market, the S&P BSE Mid-Cap index fell 0.12% and the S&P BSE Small-Cap index rose 0.01%. The market breadth was almost even. On the BSE, 2094 shares rose and 2000 shares fell. A total of 163 shares were unchanged. The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, dropped 3.50% to 11.37. Economy: The HSBC Flash India Composite PMI Output Index surged to 65.2 in August, up from 61.1 in July, signaling one of the fastest rates of expansion in over a year. The services sector led the upturn, with the HSBC Flash India Services PMI Business Activity Index climbing to 65.6, compared to 60.5 in July. Meanwhile, the HSBC Flash India Manufacturing PMI Output Index rose to 64.2, up from 62.5 in July. The broader Manufacturing PMI, which includes new orders, employment, and inventories, edged up to 59.8, compared to 59.1 in the previous month. Separately, Indias eight core industries grew by 2% in July 2025 compared to the same month last year, according to data released by the Commerce and Industry Ministry on Wednesday. The growth was driven by higher production in steel, cement, fertilisers, and electricity. The revised core sector growth for June 2025 stood at 2.2%, pointing to a steady industrial trend in the early months of the fiscal year. Numbers to Track: The yield on India's 10-year benchmark federal paper advanced 0.48% to 6.528 from the previous close of 6.497. In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 87.2500 compared with its close of 87.0700 during the previous trading session. MCX Gold futures for 3 October 2025 settlement rose 0.04% to Rs 99,346. The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was up 0.03% to 98.28. The United States 10-year bond yield added 0.26% to 4.309. In the commodities market, Brent crude for October 2025 settlement rose 65 cent or 0.97% to $67.49 a barrel. Global Market: The US Dow Jones index futures were currently down by 121 points, signaling a negative opening for US stocks today. European stocks declined on Thursday as traders assessed the economic data from the region. HCOB Flash Eurozone Composite PMI Output Index rose to 51.1 in August 2025, from 50.9 in July 2025. HCOB Flash Eurozone Manufacturing PMI rose to 50.5 in August 2025, from 49.8 in July 2025 while HCOB Flash Eurozone Services PMI Business Activity Index edged down to 50.7 in August 2025 from with 51.0 in July 2025. Asian indices ended mixed as investors braced for three days of potentially market-moving news from the Federal Reserve's annual symposium in Jackson Hole. Central bankers from around the world will attend the event, which begins later in the day, although the key focus will be Fed Chair Jerome Powell's speech on Friday as traders look for clues on the chances of a September rate cut. Overnight stateside, two of the three key benchmarks ended the session on Wednesday in declines as tech stocks dragged the market lower. The broad market S&P 500 index slipped 0.24%, while the tech-heavy Nasdaq Composite lost 0.67%. Wednesday marked a fourth day of losses for the S&P 500 and a second negative session for the Nasdaq. Meanwhile, the Dow Jones Industrial Average was the outlier, adding 0.04%. Minutes from the Fed's July gathering released yesterday, when policymakers voted to keep rates steady, suggested that Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller were alone in pushing for a rate cut at the meeting. Fed Chair Powell had said he is reluctant to cut rates because of expected tariff-driven price pressures this summer. Stocks in Spotlight: Clean Science and Technology fell 2.76% after a trading error triggered extraordinary volumes, sparking investor jitters. The company later clarified to the exchanges that the chaos stemmed from a sell-side mistake by a domestic broker. Promoters had planned to offload up to 24% of their stake via block deals, in line with their July 17 disclosure. However, the broker mistakenly placed sell orders for a much larger quantity of shares than authorised, artificially inflating traded volumes. Bajaj Finserv rose 1.12% to Rs 1979.45 after a foreign broker initiated coverage with a 'buy' rating and a target price of Rs 2,420, citing strong earnings visibility and limited threat from Jio Financial. Nazara Technologies fell 1.31% after the Lok Sabha passed the Online Gaming Bill, 2025, which bans real money online games citing risks of gambling addiction, money laundering and financial fraud. RACL Geartech surged 8.28% after the company won a long-term supply order for transmission gears for premium motorcycles from a leading Indian manufacturer. Jupiter Wagons surged 4.12% after the company said that its material unlisted subsidiary, Jupiter Tatravagonka Railwheel Factory, has received a letter of intent (LoI) for the supply of wheelsets for the Vande Bharat train. IndusInd Bank fell 1.38%. The bank has announced the signing of a memorandum of understanding (MoU) with the National Small Industries Corporation (NSIC), a Government of India enterprise under the Ministry of MSME. Transrail Lighting added 0.30%. The company has secured a significant domestic transmission line EPC order and an international product supply order totalling to Rs 837 crore. Shanti Gold International jumped 1.19% after the companys standalone net profit surged 174.08% to Rs 24.64 crore in Q1 FY26, compared with Rs 8.99 crore posted in Q1 FY25. Revenue from operations increased 22.07% YoY to Rs 292.77 crore in Q1 FY26. Fedbank Financial Services rose 2.12% after the companys board is scheduled to meet on 25 August 2025, to consider raising Rs 2,500 crore via non-convertible debentures (NCDs). IPO Update: Mangal Electrical Industries' IPO received bids for 1,02,27,620 shares as against 52,53,301 shares on offer, according to stock exchange data at 16:50 IST on Thursday (21 August 2025). The issue was subscribed 1.95 times. Shreeji Shipping Global's IPO received bids for 66,24,76,522 shares as against 1,14,08,600 shares on offer, according to stock exchange data at 16:50 IST on Thursday (21 August 2025). The issue was subscribed 58.07 times. Vikram Solar's IPO received bids for 2,47,78,65,375 shares as against 4,53,61,650 shares on offer, according to stock exchange data at 16:50 IST on Thursday (21 August 2025). The issue was subscribed 54.62 times. Patel Retail's IPO received bids for 74,76,66,864 shares as against 78,15,612 shares on offer, according to stock exchange data at 16:50 IST on Thursday (21 August 2025). The issue was subscribed 95.66 times. Gem Aromatics' IPO received bids for 29,58,68,090 shares as against 97,82,363 shares on offer, according to stock exchange data at 16:50 IST on Thursday (21 August 2025). The issue was subscribed 30.25 times.
Business Standard
29 minutes ago
- Business Standard
Quick Wrap: Nifty Pharma Index rises 0.95%
Nifty Pharma index closed up 0.95% at 22177.7 today. The index is down 1.00% over last one month. Among the constituents, Mankind Pharma Ltd gained 3.73%, Cipla Ltd jumped 3.02% and Dr Reddys Laboratories Ltd added 2.51%. The Nifty Pharma index is down 2.00% over last one year compared to the 1.27% surge in benchmark Nifty 50 index. In other indices, Nifty FMCG index is down 0.64% and Nifty Energy index has slid 0.48% on the day. In broad markets, the Nifty 50 witnessed a rise of 0.13% to close at 25083.75 while the SENSEX added 0.17% to close at 82000.71 today.
