Public sector bank (PSB) stocks extended their rally on Tuesday, pushing the Nifty PSU Bank index to a fresh high of 9,517.70 on the National Stock Exchange. The index gained over 2 per cent in intra-day trade and has risen 4 per cent in the last three sessions, taking its total surge to 41 per cent since September 2025.
The index has now outperformed the Nifty 50 for the sixth consecutive month. In February 2026 so far, the PSU Bank index is up 5.5 per cent compared to a 2 per cent gain in the benchmark. In January, it climbed 5.7 per cent while the Nifty 50 declined 3 per cent.
Among the key gainers were Bank of Baroda, Punjab National Bank, Union Bank of India, UCO Bank, Bank of Maharashtra, Indian Overseas Bank, and Central Bank of India, which rose 3–4 per cent. State Bank of India hit a new high of ₹1,225.50 and has surged 15 per cent in seven trading sessions following strong Q3FY26 earnings.
Robust loan growth and improving asset quality have supported the rally. In Q3FY26, PSBs reported loan growth of over 14.5 per cent year-on-year, outpacing private banks. Gross NPAs improved to 2.1 per cent, while net slippages remained negligible, highlighting stronger balance sheets.
Media reports suggest that draft norms by the Reserve Bank of India to curb mis-selling of financial products could weigh more on private banks, which rely heavily on insurance-driven fee income. PSU banks, with lower exposure to such income streams, may remain relatively insulated.
Analysts note that governance reforms, capital infusion, and improved corporate asset quality over the past five years have transformed PSBs. While potential mergers remain under discussion, experts believe even the prospect of consolidation could enhance efficiency, agility, and long-term competitiveness in the sector.
Nifty PSU Bank Index Scales Fresh Peak Amid Strong Q3 Growth
