SBI, PNB, Bank of Baroda: NIFTY PSU Bank index rallies up to 3.7% amid weak market; what’s powering PSU bank stocks?

Public sector banking stocks like State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda, Union Bank, Canara Bank, and Bank of India, among several others, powered the sectoral index up 3.7%% during the trading session on Tuesday, November 9, amid an overall weak market performance.

NSE data showed that the sectoral benchmark, NIFTY PSU Bank index, gained 3.7% to hit an intraday high of 8,906.60 points during Monday’s market session, in comparison to 8,585.10 points at the previous equity market close.

As of the closing bell, the NIFTY PSU Bank index ended 3.7% higher at 8,905.35 points after the afternoon market hours on November 9.

PNB, Bank of Baroda, SBI, and Canara Bank were leading the pack of banking stock gainers as of the noon deals on Monday's market.

The surge in PSU banking stocks comes at a time when equity market investors are in a profit-booking mode after 7 days of consecutive market rallies due to the sustained buying support of foreign investors.

The NIFTY PSU Bank index significantly outperformed the benchmark NIFTY50 and SENSEX indices as investors pulled funds out of the high-growth IT stocks into other relatively low-risk bets in the Indian market.

Investors were focused on the sectoral capital rotation out of the tech sector as investments shifted into value sectors like PSU banking, pharmaceuticals, healthcare, among other domestic bets.

The overall PSU banking sector reported strong credit growth in the second-quarter results for FY27, with improving asset quality, healthy interest income growth and a reduction in overall non-performing assets in the period.

PSU bank stocks in focus today

PSU Banks outperform NIFTY50

The NIFTY PSU Bank index outperformed the benchmark NIFTY50 during the trading session on Monday, November 9, due to value-buying sentiment among investors in state-owned banking stocks amid overall selling pressure in the market.

While the NIFTY PSU Bank gained 2.5% on Monday’s market, in contrast, the benchmark NIFTY50 index lost 0.6% to hit an intraday low of 24,838.75 points, failing to sustain the 25,000 mark.

NSE data showed that the NIFTY PSU Bank has gained 4.8% in the last five sessions and has risen 7.6% in the last one month period.

However, the NIFTY50 index has outperformed the PSU banking index, rising 6% in the last five market sessions, and the benchmark has gained 10.4% in the last one-month period.