Nifty PSU Bank Index is rising 5%this week, the biggest profit in 4 months; UCO Bank leads

The lenders of the public sector such as SBI, Bank of Baroda and Punjab National Bank shared sharply this week and placed the Nifty PSU Bank index to the top of sectoral maps. All 12 ingredients of the Nifty PSU Bank index ended in the green this week, led by UCO Bank with a profit of 7.11% to £ 31.05. Bank of Baroda, Canara Bank, Bank of Maharashtra, PNB, Central Bank and Union Bank followed with profits between 5% and 6.15%. SBI climbed 5% to £ 862 and moved closer to the one -year peak of £ 875.50. Strong profits over individual counters lifted the Nifty Psu Bank index by 4.83%, its best weekly performance in four months, which took the advance from September to 9.5%. If the momentum continues and the index ends the month with profits over 11%, it will celebrate the sharpest monthly rally since December 2023. Loan question Hope and fiscal confidence has improved a higher sentiment for banking supplies after the government announced the GST rate cuts, which are expected to move the loan in the recent quarter. In addition, the outdated benefits of earlier income tax cuts are likely to support the recovery of the loan from the second half of FY26. While banks were facing NIM compression in the first quarter, analysts expect margins to go down by the end of the September, with the benefits that raise the benefits of the third quarter. Meanwhile, falling bond prices also supported the rally after earlier concerns that GST rate cut could alleviate government coffers, while the government repeated the current year’s fiscal deficit of 4.4% of GDP. Higher Treasury revenue during the June quarter helped state-owned banks report decent numbers, despite being affected by rising costs due to their faster loan recovery cycle. Japanese brokerage firm Nomura expects growth in the unsecured retail segment, which is 10% of the system credit, to pick up, led by gradually improving the quality of assets. The broker further notes that the medium-term credit growth prospects seem favorable, supported by confluence of factors, including RBI’s repo rate and CRR reduction, improving liquidity dynamics and direct and indirect tax relief. It expects system credit to improve by FY26F to 12% year. As a similar view of the domestic brokerage firm Motilal Oswal, he also projects the credit growth of 11% for FY26, with further acceleration to 13% in FY27E. “In addition, the management commentary becomes constructive. This, together with a question -led by the GST rate cut and possible resolution on rates (as negotiations resumed), is expected to increase investor sentiment,” the broker said. Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.