Nifty PSU Bank index defies negative market trend, surges nearly 3.5% intraday - BoB, BoI, Canara Bank gain over 5%

On a 12-month horizon, PSU banks have outperformed the Bank Nifty, although the margin of out-performance has narrowed now, said Kotak Institutional Equities.

Among the PSU banks index, Bank of Baroda (BoB) shares jumped by almost 6 per cent intraday: PTI

Defying the weak market trend during Tuesday’s session, shares of public sector undertaking (PSU) banks have zoomed up to 6 per cent on the exchanges, taking the Nifty PSU Bank index up nearly 3.5 per cent intraday on the NSE against a 0.3 per cent fall in Nifty50 index at around 12 PM.

Among the PSU banks index, Bank of Baroda (BoB) shares jumped by almost 6 per cent, mainly on the back of robust first-quarter earnings in FY23, followed by Bank of India which was up by over 5 per cent. Canara Bank and UCO Bank shares advanced around 4-5 per cent on the NSE intraday today.

Similarly, Union Bank of India shares gained almost 4 per cent, whereas Punjab National Bank, Central Bank, Maharashtra Bank, and Indian Overseas Bank each up around 2-3 per cent on the NSE intraday. State Bank of India share price was up around 1.50 per cent on the NSE intraday today.

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Among other PSU bank stocks, BoB shares were surging for the second straight session, and it touched a new 52-week high level of Rs 123.5 per share. Earlier last week, the bank reported 79.3 per cent year-on-year (YoY) growth in its net profit at Rs 2,168 crore in the first quarter of fiscal 2022-23 (Q1FY23), on the back of a dip in provisions for bad loans.

On a 12-month horizon, PSU banks have outperformed the Bank Nifty, although the margin of out-performance has narrowed now, said Kotak Institutional Equities, stating that decent June -quarter earnings print saw a broad-based rally in BFSI indices, including PSU Bank index.

Amid improving credit growth of the banking sector, CareEdge, a research and rating agency company, estimated that the credit growth to be in the range of 12-13 per cent during FY23. However, high inflation and rate hikes could adversely impact credit growth, it added.

“Gradual pick-up in corporate book coupled with healthy offtake in retail segment to lift overall growth trajectory. While the faster repricing of loans in a rising rate scenario to aid margin trajectory. We expect return ratios to improve, thereby, aiding valuations," ICICI Securities said in report.

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