In a week marked by heightened market volatility, triggered by renewed tensions in the Middle East, investor interest in state-owned banks remained upbeat as the Nifty PSU Bank index extended its weekly winning streak to a third consecutive week, indicating Street confidence in the growth prospects of the segment.
The index has finished four of the last five trading sessions higher, taking its weekly gain to 5.45%, which is also its biggest weekly gain since October 2024, when it rallied 7.87%. During the week, the PSU gauge also reached multiple record highs, with the latest recorded today (20 February) at the 9,691 level.
The recent uptrend has added 13.3% to its year-to-date gains, largely outperforming the benchmark Nifty 50, which has fallen 2.14% during the same period. The index has also emerged as the top sectoral performer.
While its closest peer, the Nifty Private Bank index, has also managed to attract investor interest, its performance has largely remained subdued, as it is up only 0.65%, clearly indicating that investors are rushing to add PSU banking stocks to their portfolios in early 2026.
The rally was underpinned by robust December quarter earnings, supported by an acceleration in system-wide credit growth, margin recovery, and improved asset quality.
The Union Budget’s record capex push ignited buying momentum, as higher government spending is expected to drive credit expansion at state-owned banks. Earlier, however, the budget’s higher borrowing plan for FY27 had sparked panic selling, though the stocks have since made a strong comeback.
11 PSU banks finish the week higher; Indian Bank leads
Overall, 11 out of the 12 constituents of the Nifty PSU Bank index finished the week higher, with Indian Bank emerging as the standout performer with a 7.5% surge, followed by Union Bank of India and Punjab National Bank, which surged 7.2% and 7.1%, respectively.
Bank of Baroda was another top performer in the pack, rallying 6.6%, while Canara Bank saw its shares spike 6.5%. Other stocks, such as Bank of Maharashtra, Bank of India, Indian Overseas Bank, Central Bank of India, State Bank of India, and UCO Bank, all wrapped up the week with gains between 1% and 5%.
Notably, the market capitalization of SBI topped ₹12 lakh crore for the first time during the week, making it the fourth most-valued listed company in the Indian stock market. The milestone was supported by an unbroken seven-month winning streak, during which the stock gained 53%.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
