Nifty PSU Bank rises 2%, SBI, BoB, BOI, Indian Bank, Canara Bank hit fresh 52-week high; here are 2 reasons why

The Nifty PSU Bank index rose 2% to hit a new record high of 8,330.75, as shares of Bank of Baroda, State Bank of India, Indian Bank, Bank of India and Canara Bank hit fresh 52-week highs in today’s trade.

The rise in share prices of these public sector banks is due to two primary reasons: strong Q2 performances, and Sebi’s recent announcement of new rules for the Nifty Bank index.

PSU Banks’ Q2 performance –

Leading the Nifty PSU Bank index was Bank of Baroda, which rose 4.53%, followed by Indian Bank, which was up by 2.52%. A common thread that has boosted investor sentiment in these stocks is the improvement in net asset quality or NPAs.

Bank of Baroda recorded an 8% decline in its net profit, but saw improvement in asset quality. Net interest margin (NIM) declined by 15 basis points to 2.96% in Q2FY26 from 3.11% a year ago. The lender’s net interest income (NII) rose by 2.7% to ₹11,954 crore, versus ₹11,637 crore in Q2FY25.

Indian Bank posted a core income rise of 6% and its net profit also grew by 11.5% on a year-on-year basis. Its standalone revenue also rose by 7.35% to ₹19,076.57 crore YoY, while NII rose by 6%. Improvement in asset quality was also noticed, with reductions in both gross and Net NPAs.

Bank of India also posted positive Q2 results in October, with a rise of 8% YoY in net profits to ₹2,555 crore. Global and Domestic NIM for Q2FY26 stood at 2.41% and 2.66% respectively. BOI also recorded an improvement in NPAs, with gross NPAs improving by 187 bps and net NPA ratio by 29 bps YoY.

Canara Bank also posted its Q2 earnings, with a 19% YoY rise in net profit to ₹4,773.96 crore. The bank’s net interest income (NII) declined 2% to ₹9,141 crore, while other income grew 41.6% on a year-on-year basis. NIM marginally declined to 2.52% in Q2, versus 2.55% in the previous quarter.

State Bank of India will be announcing their Q2 results today.

What are the new rules by Sebi for Nifty Bank?

The markets regulatory body announced new rules that would lead to a rejig in the Nifty Bank index. Under the revised framework:

• The index must include a minimum of 14 constituents, up from 12 currently.

• The weight of the top stock will be capped at 20%, down from the current 33%.

• The combined weight of the top three constituents can’t exceed 45%, compared with the current 62%.

The move would primarily impact HDFC Bank, ICICI Bank, and State Bank of India—whose weights will be gradually reduced in four tranches until March 31, 2026.

At the time of reporting, all constituents of the Nifty Bank were trading in the green, while Nifty Bank advanced by 0.74%, where all banks, except AU bank, were trading positively.