PSU Bank Stocks Decline After 5-Day Rally; Bank of Baroda, Union Bank Among Top Losers

Market Performance

Following a strong five-day winning streak, PSU bank stocks experienced a pullback on July 1, as broad-based profit booking dragged the Nifty PSU Bank Index into negative territory.

• The Nifty PSU Bank Index slipped after a 2.6% gain recorded in the previous session.
• Profit booking emerged as a key driver, despite a recent rally led by supportive government cues and strong financial results.
• The Nifty Bank Index also experienced a downturn, hovering near 57,164, as both PSU and private bank counters pressured it.

Main News

Several central public sector banks saw notable declines:

• Bank of Baroda fell nearly 2%, emerging as the top laggard on the PSU index.
• Shares of Union Bank of India and Punjab & Sind Bank slipped nearly 1.5% each.
• UCO Bank, Canara Bank, and Bank of Maharashtra slipped by up to 1%.
• Bank of India, Indian Bank, State Bank of India (SBI), and Central Bank of India recorded marginal losses.
• In contrast, Indian Overseas Bank (IOB) traded in the green with minor gains, defying the overall trend.

Company Details

The broader fall follows a sharp surge on the previous trading day, when PSU banks gained momentum after the Finance Ministry advised public sector lenders to:

• Extend more credit to support economic activity.
• Monetise subsidiaries through Initial Public Offerings (IPOs) and stake sales.

According to reports, nearly 15 subsidiaries or joint ventures of PSU banks are being evaluated for IPOs or strategic disinvestment over the medium to long term. Noteworthy among these are:

• SBI General Insurance
• SBI Payment Services

These strategic moves have kept PSU banks in focus, making them key players in market discussions over the past week.

Financial Snapshot of PSU Banks

Despite the recent dip, PSU banks have reported robust financial growth:

• FY25 Net Profit of 12 public sector banks: ₹1.78 lakh Crore
• YoY Profit Growth: Up by 26%
• Absolute Profit Increase: ~₹37,100 Crore

These numbers reflect the strong fiscal performance of major players like Bank of Baroda, Union Bank of India, Canara Bank, and SBI, among others.

Summary of the Article

The rally in PSU banks was halted as investors booked profits after a sustained five-day rise. Prominent names, including Bank of Baroda, Union Bank of India, Punjab & Sind Bank, UCO Bank, and Canara Bank, led the decline. Despite the correction, the financials remain strong, with record net profits and government-led initiatives expected to support long-term growth.

As of now, PSU banks continue to be in the spotlight, especially with ongoing discussions about monetizing assets through IPOs and divestments. The sector may see further interest in the coming sessions depending on broader market sentiment and institutional activity.