SBI, Canara Bank and Indian Bank Hit 52-Week Highs as PSU Bank Index Rises 1%

Mumbai, 24 September 2025: Public sector banks (PSBs) remained in sharp focus on Wednesday, with State Bank of India (SBI), Canara Bank, and Indian Bank scaling fresh 52-week highs during intra-day trade on the NSE, even as the broader market showed weakness. By 10:07 a.m., the Nifty PSU Bank index was the top sectoral gainer, up 1.2%, after touching an intra-day high of 7,543.50. While strong, the index continues to trade below its record peak of 8,053.30, set on 3 June 2024. Over the past month, the Nifty PSU Bank index has gained 8%, significantly outpacing the less than 1% rise in the Nifty 50.

SBI Touches ₹880.50 While Indian Bank and Canara Bank Scale New Highs

Stock-specific moves added to the momentum in PSBs. SBI surged to a new 52-week high of ₹880.50, surpassing its earlier peak of ₹875.50 recorded on 6 December 2024, and inching closer to its all-time high of ₹912.10 hit on 6 June 2024. Indian Bank also scaled a fresh high of ₹716.80, marking a 3% intraday jump, while Canara Bank advanced 2% to ₹124.35, its new yearly peak. In addition, Bank of Baroda and Punjab National Bank traded near their respective 52-week highs, both edging up about 1% intraday.

Policy Signals on Foreign Investment Fuel Optimism Around PSU Banks

The upward trajectory in PSB stocks coincided with reports that the Government of India may consider raising the foreign investment limit in public sector banks from 20%, while maintaining a minimum 51% government holding. The proposal is viewed as part of the Viksit Bharat 2047 vision, designed to strengthen India’s banking system and broaden global investor participation.

This comes alongside visible multi-year improvements in the sector’s health. Gross non-performing assets (NPAs) in PSBs have dropped sharply to 2.58% in March 2025 compared with 9.11% in March 2021. At the same time, net profit surged to ₹1.78 trillion in FY25 from ₹1.04 trillion in FY21, while dividend payouts increased to ₹34,990 crore from ₹20,964 crore over the same period. The consistent improvement in asset quality and profitability has reinforced confidence in the long-term resilience of PSBs.

Liquidity Tightness Shapes Day’s Market Trade

Despite gains in PSBs, broader liquidity conditions in the financial system influenced overall market sentiment. The banking system liquidity turned negative this week as Goods and Services Tax (GST) and advance tax outflows of ₹2.5-3.0 trillion created a shortfall of about ₹32,000 crore, pushing overnight money market rates above the 5.5% repo rate. To address the crunch, the Reserve Bank of India (RBI) conducted two variable rate repo auctions of ₹1 trillion each.

Relief is expected later this month, with liquidity improving through inflows from the cash reserve ratio (CRR) cut of ₹60,000 crore and bond maturities worth about ₹72,000 crore. This balancing act is shaping trading conditions across the financial markets and influencing sectoral performance.

Divergence Between PSU Banks and Broader Indices Reflects Market Dynamics

The wider indices reflected weakness even as PSU banks rallied. By mid-morning, the Sensex was down 0.44% at 81,740.63, while the Nifty slipped 0.30% to 25,093.40. This divergence highlights how sector-specific triggers, such as potential reforms and improving fundamentals, are driving PSU banks independently of the broader market’s trajectory.

Public sector banks continued to outperform the broader market, led by gains in SBI, Canara Bank and Indian Bank, supported by policy signals and improved asset quality metrics. While broader indices showed weakness due to liquidity pressures, PSU banks reflected resilience and growth momentum. The interplay of structural reforms, profitability gains, and short-term liquidity factors will remain central to market performance in the near term.

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