Introduction

In a remarkable turn of events, the Nifty PSU Bank index soared nearly 3%, closing at 6,743 points. This surge saw 11 out of 12 constituents finish the day in positive territory, with the index reaching a new record high of 6,788 points. Among the standout performers were Indian Overseas Bank, UCO Bank, and Canara Bank, each showcasing impressive gains. This article delves into the details of this market rally, exploring the factors driving the surge and its implications.

Indian Overseas Bank Takes the Lead

Indian Overseas Bank emerged as the top gainer, experiencing an 18% rally to ₹79.7 apiece. The stock not only achieved significant growth but also touched a new multi-year high of ₹81. This exceptional performance sets a positive tone for the banking sector, signaling increased investor confidence.

State-Run Banks on the Rise

State-run Indian banks witnessed a notable uptick in today’s trading session, setting the stage for the Reserve Bank of India’s monetary policy announcement on February 8. Analysts, including Madan Sabnavis, Chief Economist at Bank of Baroda, anticipate the RBI maintaining the status quo for the sixth consecutive time.

RBI’s Stance and Expert Insights

As per Sabnavis, a repo rate cut seems unlikely, suggesting a probable shift in liquidity stance. The RBI has been explicit that repo cuts hinge on headline inflation reaching and sustaining the 4% target. Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Shares and Stock Brokers, echoes this sentiment, ruling out a rate cut given the current CPI level.

In its December meeting, the RBI unanimously decided to uphold the policy repo rate at 6.5%, a consistent stance since February 2023. Meanwhile, the yield on the 10-year Indian government bond experienced a slight drop in Wednesday’s trading session.

Standout Performances of PSU Banks

The Nifty PSU Bank index’s robust performance was mirrored by individual banks. UCO Bank, for instance, continued its winning streak, reaching a fresh 52-week high of ₹70 per share and concluding the session with an impressive 16.33% gain, settling at ₹68.40.

Central Bank of India also posted a notable uptick of 11.4%, settling at ₹74.15 per share. Canara Bank, in a strategic move, saw its shares surge by nearly 6% following the announcement of considering a split of its equity share.

State Bank of India’s Milestone

State Bank of India emerged as a star performer, gaining 3.8% and touching a new all-time high of ₹678 apiece during intraday trade. This propelled the bank’s market capitalization to surpass the ₹6 lakh crore milestone, marking it as the second PSU firm to achieve this feat after the Life Insurance Corporation.

Overall PSU Banking Landscape

Other PSU bank stocks, including Punjab & Sind Bank, Bank of India, Punjab National Bank, Union Bank of India, and Indian Bank, closed today’s session with gains ranging between 0.1% and 3.7%. This collective uptick signals a positive sentiment in the PSU banking sector.

FAQs

Q: What led to the surge in the Nifty PSU Bank index? A: The surge in the Nifty PSU Bank index was driven by a collective positive performance of PSU banks, notably Indian Overseas Bank and UCO Bank.

Q: Why are state-run banks gaining momentum? A: State-run banks are gaining momentum in anticipation of the RBI maintaining the status quo in its upcoming monetary policy announcement.

Q: What is the expert opinion on the repo rate? A: Experts, including Madan Sabnavis and Sujan Hajra, suggest a repo rate cut is unlikely, indicating a probable shift in liquidity stance by the RBI.

Q: How did individual banks perform in today’s session? A: UCO Bank, Central Bank of India, and Canara Bank showcased remarkable performances, contributing to the overall positive trend in the banking sector.

Q: What milestone did State Bank of India achieve in today’s trade? A: State Bank of India touched a new all-time high of ₹678 apiece, surpassing the ₹6 lakh crore market capitalization milestone.

Q: What is the significance of the RBI’s decision to maintain the policy repo rate in December? A: The RBI’s decision to maintain the policy repo rate at 6.5% since February 2023 indicates a consistent monetary policy stance.

Conclusion

In conclusion, the Nifty PSU Bank’s impressive climb, led by standout performances from individual banks, paints a positive picture for the banking sector. The anticipation of the RBI maintaining its current monetary policy adds to the overall optimism. Investors will keenly watch these developments, hoping for sustained growth and stability in the Indian banking landscape.

Nifty PSU Bank Climbs Nearly 3%: A Record-Breaking Session for Indian Banks