Nifty PSU Bank Ends Two-Day Losing Streak, Amid Rally In Public Sector Bank Stocks - Know Why

The Nifty PSU Bank index ended a two-session losing streak on March 27 as it closed in the green at 6,129.4 levels up by 2.5 per cent. Earlier in the day the index surged nearly 2 per cent to trade at an intraday high at 6264.85 levels amid a rally in public sector bank stocks. Previously the index declined nearly 3 per cent between March 24 and March 26 in its two-session losing streak.

Nifty PSU Bank Top Gainers

On March 27, as many as 11 constituents of the Nifty PSU Bank index gained while one constituent closed in the red. Bank of Baroda, Union Bank and Punjab National Bank shares gained the most as they closed higher by up to 4.34 per cent. Shares of Bank of Baroda gained the most as the stock surged over 5 per cent to hit an intraday high of Rs 232 apiece on the NSE.

The gains made by the Nifty PSU Bank index’s top constituents by weightage such as State Bank of India, Punjab National Bank and Bank of Baroda buoyed the index into the green zone. While Bank of Baroda emerged as the top gainer, State Bank of India shares and Punjab National Bank shares closed higher by 1.05 per cent and 3.46 per cent respectively.

Other major gainers included Bank of India, Canara Bank, Central Bank and UCO Bank. Shares of these banks closed between 1.97 per cent and 2.74 per cent. Shares of Indian Overseas Bank bucked the trend as the stock closed at Rs 41.79 apiece down by 1.69 per cent.

Why Is Nifty PSU Bank Gaining

The Nifty PSU Bank index gained after both houses of the Parliament greenlit the Banking Laws (Amendment) Bill on March 26. Finance Minister Nirmala Sitharaman also mentioned that the Banking Laws (Amendment) Bill is aimed at impacting five different acts such as:

(i)Reserve Bank of India Act, 1934,

(ii)Banking Regulation Act, 1949,

(iii)State Bank of India Act, 1955

(iv)Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970,

(v)Banking Companies (Acquisition and Transfer of Undertaking) Act, 1978.

Additionally investor sentiment regarding PSU banks was bolstered by Sitharaman sharing positive data regarding the performance of PSU banks in the Parliament.

Sitharaman said that between 2014 and September 2024, the network of banks in India has grown substantially to 42,511 branches of Scheduled Commercial Banks (SCBs) raising the total number of branches to 1,65,501. Sitharaman added that as many as 85,116 branches out of the total number of branches belong to Public Sector Banks (PSBs).

Sitharaman added that public sector banks have also posted their highest-ever profit of about Rs 1.41 lakh crore in the last fiscal. The finance minister also projected that the profitability would further increase in 2025-26.

Sitharaman added that no major lapses were reported after the completion of a comprehensive audit of gold loan portfolios of state-owned banks. She mentioned that while Non-Performing Assets have reduced significantly, the government will continue to take strict action against wilful defaulters. The Finance Minister also reiterated that the government will continue to support Public Sector banks regarding issues such as bad-loans.