September 24, 2025 — Midday Update
The Nifty PSU Bank index climbed about 1% on Wednesday, standing out among sectoral indices. SBI, Indian Bank, and Canara Bank all touched new 52-week highs, supported by strong buying interest and hopes of sector reforms.
What’s Driving the Rally?
Investors are betting on possible policy changes, including a review of foreign investment limits in public sector banks. Expectations of more capital inflows and stronger valuations have triggered a fresh wave of optimism in PSU counters.
Who’s Leading the Charge?
- SBI surged to a new 52-week high of around ₹880.50, with sustained buying momentum.
- Canara Bank rose over 2%, scaling a fresh one-year peak near ₹124.55.
- Indian Bank outperformed, rallying nearly 3.8% to touch ₹722, its highest level in a year.
Other PSU banks such as Bank of Baroda, Indian Overseas Bank, and Central Bank also gained ground, though not all marked new highs.
| Stock / Index | Level | Change |
|---|---|---|
| Nifty PSU Bank Index | +~1.0% | Outperforming |
| SBI | ₹880.50 | 52-week high |
| Canara Bank | ₹124.55 | 52-week high |
| Indian Bank | ₹722.00 | 52-week high |
Market Sentiment & Technical View
The PSU banking pack is riding strong institutional buying, with several counters breaking into new highs. This shows confidence in the sector’s fundamentals and signals potential for more upside if momentum holds.
Technically, the PSU Bank index is now close to reclaiming its broader 52-week peak. If the momentum continues, it could set the stage for fresh breakouts across leading PSU names.
Risks to Watch
- Policy clarity: Gains could fade if reforms on foreign investment are delayed or rolled back.
- Valuation stretch: Some banks may already be pricing in best-case scenarios.
- Earnings & NPAs: A slip in quarterly results or rise in bad loans could trigger selling.
- Macro impact: Higher interest rates or liquidity constraints could squeeze banking margins.
Outlook
The rally highlights growing investor confidence in PSU banks, supported by expectations of structural reforms, stronger capital inflows, and steady buying from both domestic and institutional investors. The sector, once viewed as lagging behind private peers, is now showing signs of renewed strength, thanks to improving asset quality, better credit growth, and anticipation of policy changes such as a possible hike in foreign investment limits.
If these policy announcements materialize and earnings momentum stays firm, PSU banks could continue to outperform broader markets. Improved provisioning, rising retail loan demand, and a healthier balance sheet outlook are further boosting sentiment.
For now, with SBI, Indian Bank, and Canara Bank touching fresh 52-week highs, it is evident that public sector banks are back in sharp investor focus. Their performance not only lifts the PSU Bank index but also sets the tone for a more optimistic outlook on the entire state-owned banking space.
