Last Updated:
Nifty PSU Bank index advanced over 2%, lifted by a strong 3–5% surge in Bank of Baroda and Canara Bank shares; Key points for investors
The Nifty PSU Bank index climbed over 2% on Monday, propelled by a sharp 3-5% rally in Bank of Baroda and Canara Bank shares after Q2 FY26 earnings
PSU Bank Stocks Rally: The Nifty PSU Bank index advanced over 2% on Monday, lifted by a strong 3–5% surge in Bank of Baroda and Canara Bank shares following their Q2 FY26 results, alongside supportive policy chatter and consolidation buzz. All 12 constituents traded in the green.
Bank of Baroda jumped 4.6% to Rs 291.2 as of 11 am, touching a record high and driving the index 2.19% higher to 8,363.2. The lender reported a better-than-expected July–September performance, with net interest margin rising 5 bps to 2.96% despite the 100-bps repo rate cut in June, and improvement in asset quality. While profit after tax declined 8% YoY, it rose 6% sequentially on lower provisions.
Broker sentiment turned more bullish post-earnings
- HSBC reiterated buy and raised target to Rs 340, citing broad-based loan growth, NIM expansion and strong asset quality
- Citi kept buy with a Rs 350 target, noting an 8% profit beat and healthy corporate loan traction
- Nomura upgraded to buy and lifted target to Rs 320, flagging attractive valuations
- CLSA reiterated outperform with a Rs 325 target, pointing to resilient asset quality despite softer fee income and lower CASA
Canara Bank gained 2.9% to Rs 140.94 after reporting sequential improvement in gross and net NPAs in the September quarter. Net profit grew 19% YoY to Rs 4,774 crore, while global advances and deposits climbed 13.74% and 13.40%, respectively.
Investor sentiment in state-run lenders was further boosted by policy-driven triggers. Reports last week indicated the government may allow up to 49% direct foreign investment in PSU banks — more than double the current 20% cap — narrowing the gap with private banks, where FDI is permitted up to 74%. The proposal, under discussion between the finance ministry and RBI, could enhance capital-raising avenues for public-sector lenders.
In a separate development, reports also suggested the government is evaluating a merger between Union Bank of India and Bank of India, a move that could create the second-largest PSU lender after SBI and support broader consolidation efforts.
Among other movers in the index, Indian Bank rose 3.22%, Union Bank gained 2.35% and Bank of India added 1.99%.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
November 03, 2025, 12:57 IST
Read More
