Nifty PSU Bank index surged almost 4% in intra-day deals on Friday, March 20 following broader gains on Dalal Street. This comes after a steep 3% fall in the previous session.
The Nifty PSU Bank jumped as much as 3.8% to its day’s high of 8,731.15.
Meanwhile, the Indian stock market benchmarks Nifty and Sensex also rose on Friday, March 20, tracking gains in Asian markets and aided by short-covering after sharp losses in the previous session. Sentiment improved as crude oil prices eased and the US dollar softened, offering relief to investors.
Optimism was further supported by geopolitical signals, with Israeli Prime Minister Benjamin Netanyahu indicating that Israel would avoid targeting energy infrastructure and suggesting the conflict could end sooner than expected. Meanwhile, US President Donald Trump ruled out deploying ground troops, saying he is “not putting troops anywhere,” easing fears of further escalation. Oil prices also fell to around $107 per barrel from $119 in the previous session.
PSU Banks stock performance
All constituents of the index were trading in the green.
Canara Bank surged the most, up almost 5% followed by Union Bank of India, Maharashtra Bank, and Indian Bank rallying over 4% each. Meanwhile, Bank of India, Punjab National Bank, Bank of Baroda, State Bank of India, Indian Overseas Bank, and UCO Bank also added between 3-4% each. Punjab and Sind Bank and Central Bank of India were also up over 2% each.
Should you buy PSU Bank Stocks?
Brokerage firm Antique Stock Broking turned positive on PSU banks such as Punjab National Bank and Canara Bank after the recent correction, citing valuation comfort and historical recovery trends. PSU banks have over around 11% since February 28, compared to a 7% decline in private banks, reflecting a familiar pattern seen during past global shocks.
“In most instances, PSU banks have also more than reversed the losses within six months post the correction,” Antique said. While near-term earnings may be impacted by rising G-sec yields and treasury pressures, the brokerage upgraded PNB and Canara Bank to ‘Buy’.
It added: “Whilst we remain conservative on PSU bank margins and retain our target multiple of 1 time FY28 book value, we upgrade PNB and Canara Bank to ‘Buy’ based on valuation upside from CMP.”
Antique prefers State Bank of India for its strong liability franchise and Union Bank of India for expected RoA of 1.15–1.25% in FY27. It has set targets of ₹140 for PNB, ₹165 for Canara Bank, ₹225 for Union Bank, and ₹1,210 for SBI.
Separately, Emkay Global Financial Services also highlighted that PSU banks have historically corrected more than private peers during major geopolitical shocks.
“However, in 3-6 months post the corrections PSU banks have more than reversed the losses in each of these periods, even higher than their private peers – with the exception of the period of crude oil shock during Iran sanctions in 2018-19,” Emkay said.
It added that PSU banks could revert to pre-crisis valuation multiples within six months once the current uncertainty stabilises.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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