Nifty PSU Bank extends rally for 6th session; SBI, UCO Bank, BoB surge up to 4%

Shares of public sector banks continued their gaining momentum for the sixth straight session on Thursday, with all 12 constituents of Nifty PSU Bank index flashing in green zone, in an otherwise fragile broader market. The uptrend in Nifty PSU Bank index was unaffected by volatility in the broader market after Finance Minister Nirmala Sitharaman made no big announcements in her interim budget speech in the Parliament.

The Nifty PSU Bank hit a fresh all-time high of 6,438.10 points, registering a gain of 2.65% in intraday. The index has risen 11.5% in the last six sessions.

Among the state-owned lenders, UCO Bank, Bank of India, and Union Bank of India were top performers with more than 4% gain in each stock. Index heavyweights State Bank of India (SBI) and Bank of Baroda rose between 1-3%, while Punjab National Bank, Canara Bank and Central Bank added over 3% during the session so far. Shares of Indian Overseas Bank, Maharashtra Bank, and Indian Bank also gained up to 2%.

The rally in the PSU bank stocks was driven by their healthy third quarter earnings figure. Among the public sector banks, Bank of Baroda, Canara Bank, Union Bank, Indian Bank, Central Bank of India, IDBI Bank, and Bank of Maharashtra have released their December quarter numbers, while SBI and others are lined up to unveil their financial results this month.

In the first half of the current fiscal (H1 FY24), the combined profit of 12 PSU lenders stood at ₹68,061 crore, a jump of 66% over H1FY23's profit of ₹40,991 crore. In Q2 FY24, the 12 PSU lenders registered  31% growth in net profit at ₹33,643 crore as compared to the same period last year.

"Despite adopting an aggressive lending approach, PSU banks still have room for growth, given their comparatively lower loan-to-deposit ratio compared to private banks. Traditionally trading at a discount to private banks, PSU banks have gradually caught up in recent years. Currently, they are trading close to their historical average of price-to-book value. The evident eagerness of PSU banks to expand their balance-sheet suggests that this momentum is likely to persist," says Vinod Nair, Head of Research, Geojit Financial Services, in a recent note.

Meanwhile, Indian benchmark Indices turned jittery after FM Nirmala Sitharaman concluded her interim budget speech in the Parliament. The BSE Sensex slipped as much as 167 points to hit a low of 71,585, and the NSE Nifty fell by 67 points to 21,659 levels. However, the market soon recouped losses and were trading near baseline with positive bias.

Early today, the Sensex opened at 71,998.78, up 247 points higher against the previous closing level of 71,752.11, and the Nifty50 belled the day at 21,780.65, up 55 points compared to Wednesday’s closing mark of 21,725.70.

The top gainers on the BSE Sensex were Maruti Suzuki India, Power Grid Corporation of India, Mahindra & Mahindra, Tata Consultancy Services, and ITC. On the other hand, Larsen & Toubro, UltraTech Cement, Wipro, Tech Mahindra, and Bharti Airtel. 

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)