PSU Bank Stocks Rally: Union Bank, SBI, Bank of India Shares Lead as Nifty PSU Bank Hits Fresh Record

Market Performance: PSU Banks Steal the Spotlight

While the broader stock market today moved within a narrow range, PSU bank stocks quietly scripted a fresh milestone.

For the seventh session in a row, buying interest stayed strong in public sector banks. The Nifty PSU Bank index extended its rally and climbed 1.32% to touch a new all-time high of 8,856 on January 6.

This came right after a 0.5% rise in the previous session, taking the index’s seven-day gain close to 7%. The steady climb shows how consistently traders have been rotating money into banking names, even as other sectors cooled off.

Adding to the mood, the Nifty Bank index had already hit a record 60,437 a day earlier, reinforcing the strength seen across banking stocks.

Main News: Broad-Based Buying Across PSU Banks

What stood out was the breadth of the rally.

All 12 stocks in the Nifty PSU Bank index traded in the green. The move wasn’t limited to one or two heavyweights—it was across the board.

• Union Bank of India share price jumped 3%, hitting the day’s high of ₹167
• Bank of India, SBI, Bank of Maharashtra, Canara Bank, Indian Bank, and UCO Bank share prices rose over 1% each

This kind of participation often signals deeper confidence in the sector rather than short-term trading spikes.

Why PSU Bank Stocks Are Staying Strong?

The rally hasn’t come out of thin air. Several system-level trends have been quietly working in favor of banks.

Credit growth across the system has shown visible improvement in recent months.

According to the latest fortnightly data (as of 15 December 2025):

• System credit growth increased to 12% year-on-year
• This was higher than 11.5% YoY recorded on 28 November 2025
• Deposit growth eased to 9.4% YoY, compared with 10.2% YoY earlier

Separate sectoral credit data for November 2025 also showed:

• Overall credit growth at 11.4% YoY
• Up from 11.1% in October and 10.2% in September
• Growth supported by industry, retail, and services

For banks, steady credit expansion is the base on which earnings momentum builds.

Policy Support Remains a Key Tailwind

Liquidity and policy conditions have also played their part.

The Reserve Bank of India has already cut the policy rate by a cumulative 125 basis points up to December. Lower rates typically reduce borrowing costs, helping loan demand stay resilient.

Alongside this:

• GST rationalisation
• Earlier income tax reductions

have collectively supported credit demand across segments. These measures are now gradually reflecting in system-level numbers, which markets tend to price in early.

Signs of Improving Financial Stability

Another quiet positive has come from asset quality trends.

The RBI’s bi-annual Financial Stability Report (FSR) highlighted an improvement in headline asset quality indicators across India’s financial sector. While not flashy, this matters deeply for PSU banks, where balance sheet health has been closely watched in recent years.

Cleaner books and stable credit growth together form a strong foundation for sustained market interest.

Company Details: PSU Banks in Focus

Here’s a quick snapshot of the key PSU banking names driving the rally:

• Union Bank of India – Led the gains with a 3% jump
• State Bank of India (SBI) – Continued to trade firm, supporting index strength
• Bank of India – Moved higher with sector momentum
• Bank of Maharashtra – Part of the broad-based buying
• Canara Bank – Extended gains in line with peers
• Indian Bank – Tracked the sector-wide uptrend
• UCO Bank – Also closed higher as PSU banks rallied

No single stock carried the index alone. Strength was shared across the pack.

Summary: PSU Banks Hold Firm Amid Quiet Confidence

The story playing out in PSU bank stocks is one of consistency, not speculation.

• The Nifty PSU Bank index has hit a fresh record high of 8,856
• Gains have extended for seven straight sessions
• Credit growth numbers have steadily improved
• Policy support and financial stability indicators remain favorable
• Buying has been broad-based, covering both large and mid-sized PSU banks

In a market where many sectors are pausing, PSU banks continue to move forward—slow, steady, and supported by numbers that traders are finding hard to ignore.

Source: Livemint