PSU bank stocks fall up to 5% on profit booking

Shares of PSU banks fell up to 5% in Friday’s intraday trade as investors booked profits following a sharp rally.

Among PSU stocks, Punjab and Sind Bank was the top laggard as it declined nearly 5%. Meanwhile, Union Bank of India, Central Bank of India, Bank of Maharashtra and PNB plunged over 3% each.

That said, 2022 has been the best year in a decade for the PSU bank stocks.

Bank stocks gave the highest returns in five years, as the Nifty Bank gained more than 24% in 2022 and scaled a lifetime high. This has been the best performance since 2017 when the index gave more than 40% returns.

In 2022, while there were board-based gains in the banking pack, it was public sector banks that stole the show. State-owned banks gave their best-ever gains in at least a decade. Nifty PSU Bank index has risen nearly 80% in 2022, the highest ever in a decade.

Money managers do expect the banking pack to remain on the top of the betting list in 2023 as a recovery in the domestic economy will see the sector leading earnings growth for India Inc.

In Q2, most PSU banks reported stellar earnings coupled with improvements in asset quality and rising credit growth numbers. Besides, state-owned banks also reported healthy NIMs, which analysts believe might be sustainable for another quarter as rising deposit rate hikes may be passed with a lag.

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