The shares of Hyundai Motor India, Jubilant Foodworks, Kalyan Jewellers India and Rail Vikas Nigam Limited (RVNL), meanwhile, will be excluded from the index and will likely see outflows worth $715 million, according to Nuvama.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Market veteran Gurmeet Chadha has said that five years ago, it would have been hard to imagine State Bank of India (SBI) overtaking IT heavyweights such as Tata Consultancy Services (TCS) and Infosys in terms of market capitalisation. While stopping short of writing off the tech stocks, the Complete Circle Consultants’ Managing Partner and CIO attributed the remarkable resurgence of PSU banks in recent years to improved risk management practices and accelerated digitisation.

“Who would have thought 5 years back that SBI would have more market cap than TCS and Inf…Great turnaround in PSU banks as they become better risk managers and digitise. I would not write off Indian IT cos…they have the ability to pivot & convert this into an opportunity..,” Chadha said in a tweet on X on Thursday.

The comment comes on the back of a massive sell-off in IT stocks. The Nifty IT index has plunged over 8% over the week due to AI-led worries.

On Thursday, a fresh round of panic selling in tech stocks swept the D-Street. The IT index plunged over 4% to a four-month low, erasing a staggering Rs 1.3 lakh crore in combined market value. Shares of Indian software exporters like TCS, Infosys and Wipro slid more than 4%, hit by persistent fears of AI-led disruption in the sector and compounded by stronger-than-expected US jobs data that dimmed hopes of near-term interest rate cuts.

Nifty IT is the worst-performing index, plunging 21% over the past 12 months.

With a market capitalisation of Rs 10.91 lakh crore on BSE, SBI is the fourth most valuable company and only behind Reliance Industries (RIL, Rs 19.87 lakh crore), HDFC Bank (Rs 14.26 lakh crore) and Bharti Airtel (Rs 11.48 lakh crore).

Meanwhile, TCS’ mcap has slipped to Rs 10.52 lakh crore, while that of Infosys is at Rs 5.97 lakh crore.The companies’ market capitalisation has eroded following a 30% drop in TCS’ share price and a 25% decline in Infosys’ over the past 12 months.
Also read: Shriram Finance at Rs 2 lakh crore Mcap outpaces Nifty as lone multibagger. Can the party continue?

In contrast, the Nifty PSU Bank index has surged over 50% in the last 12 months. Individually, Indian Bank is the top gainer with 63%, followed by 62% returns by SBI, which is swiftly closing the gap.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

PSU bank stocks plunged up to 7% on Wednesday after the government clarified it is not considering any proposal to raise the foreign direct investment (FDI) limit in public sector banks to 49%, from the current 20%.

The Nifty PSU Bank index plunged 271 points or 3.2% to hit the day’s low of 8,514.90. All 12 stocks were trading in the red around 2 PM.

Indian Bank was the worst hit, falling up to 7% while Punjab National Bank (PNB), Canara Bank were next in line with over 4% fall by each.

Others, including Bank of India (BoI), Bank of Baroda (BoB), Central Bank of India, Punjab & Sind Bank (PSB), Union Bank, Uco Bank, Bank of Maharashtra and Indian Overseas Bank (IOB) were down between 3.6% and 1.4% around this time.

India’s largest public lender, the State Bank of India (SBI) slipped 1.6%.

With the Nifty sliding for the fourth day in a row as rupee weakness continues to weigh on the overall markets, PSU bank stocks felt heightened selling pressure because of the FDI development. Moreover, the rupee’s slide has also given a fresh setback to the likelihood of a rate cut by the Reserve Bank of India (RBI).

“PSBs witnessed profit taking today on the back of a denial by the finance ministry to increase the FDI limit in PSBs. It was accentuated by lower probability of rate cut by RBI in the ensuing MPC meeting in the backdrop of the USDINR hitting life lows and strong GDP numbers,” Sunny Agrawal, Head – Retail Fundamental Desk at SBI Securities said.

Agrawal said that a weaker INR will exert selling pressure from foreign investors who usually tend to book profits after a strong rally.

The PSU bank stocks have seen up to 20% rally in the past three months.

Also Read: Uday Kotak on rupee @ 90: Foreign investors pulling out money appear smarter now, but game isn’t over

On Tuesday, Minister of State for Finance Pankaj Chaudhary, replying to a written query, told the Rajya Sabha that the government has not proposed increasing the FDI limit in public sector banks (PSBs).

In case of private sector banks, up to 49% of FDI is through the automatic route and beyond 49% and up to 74%, the government route is applicable.

Replying to another question, Chaudhary said the Union Government’s holdings in 12 public sector banks (PSBs) have not declined since 2020.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

Shares of public sector banks rallied on the NSE on Wednesday, with several counters gaining up to 3% as of 10:15 AM, following news that the Indian government is considering raising the foreign direct investment (FDI) limit in public sector banks (PSBs) from the current 20%.

The move, if implemented, would be part of broader financial sector reforms aimed at boosting capital inflows and strengthening the role of PSBs in economic growth.

As of 10:15 AM, the Nifty PSU Bank index was trading at 7,532.30, up 1.09% or 81.20 points from the previous close.

Among the top gainers, Indian Bank shares led the PSU bank rally with a sharp gain of 3.01%, followed by Punjab & Sind Bank, which rose 1.83%, and Canara Bank, up 1.78%.

Central Bank of India advanced 1.40%, while Indian Overseas Bank gained 1.39%. UCO Bank and Bank of India climbed 1.21% and 1.19%, respectively. Bank of Baroda added 1.12%, and State Bank of India was up 0.76%.

Union Bank of India edged higher by 0.44%, Punjab National Bank gained 0.51%, and Bank of Maharashtra saw a more modest rise of 0.40%.Investors responded positively to reports that policymakers are evaluating a proposal to increase the foreign investment ceiling in PSBs, currently capped at 20% for FDI and 10% for voting rights, significantly lower than the 74% limit in private banks.A senior government official, as per earlier ET reports, indicated that the public sector character of these banks would be preserved, with the government retaining at least a 51% stake. Discussions are underway to explore mechanisms like the “golden share” model, allowing the government to retain control even if foreign ownership increases.

The development is seen in the context of PSBs having shown significant improvement in financial health.

According to official data, gross NPAs in public sector banks declined to 2.58% as of March 2024, down from 9.11% in March 2021. Net profits rose to Rs 1.78 lakh crore from Rs 1.04 lakh crore, while dividend payouts increased to Rs 34,990 crore.

The government views these improvements as a foundation for allowing greater foreign capital participation without undermining governance or public accountability.

While a final decision is pending, the market appears to be factoring in the potential inflow of foreign capital and the long-term growth prospects for the sector. The rally in PSU bank stocks reflects investor optimism surrounding the reform push and expectations of a more capital-efficient banking system.

Also read: Who is Shrikant Badve, the newest addition to India’s billionaire club?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Amid an overall weak market sentiment, individual small and midcap stocks enjoyed their northward rally with shares of WPIL Ltd surging by as high as 44.16% in just one week.

Shares of Prudent Corporate Advisory Services rallied 40% to close the week at Rs 3,577.65 on the BSE. The stock had gained 14.75% in the last trading session alone.

Meanwhile, the shares of other smallcap stocks like AMI Organics, Syrma SGS Technology, 63 Moons Technologies and The Anup Engineering rose between 30-40% on a weekly basis.

Coffee Day Enterprises, Force Motors, Poonawalla Fincorp, Mercury Ev-Tech and Poly Medicure were the companies whose shares witnessed gains between 25 to 30%.

The BSE smallcap index too gained 6.3% week-on-week (WoW).

Apart from this, midcap stocks also surged by 21.34% with Gillette India shares rising the highest, followed by the shares of Indian Bank, which increased by 17.2% in the same time period.Shares of Central Bank Of India, Bank Of India, JSW Infrastructure, Bank Of Maharashtra, Punjab & Sind Bank, Rail Vikas Nigam (RVNL), Bharat Heavy Electricals (BHEL), Emami, Indian Renewable Energy Development Agency (IREDA) were among other gainers in the midcap sector, that witnessed weekly gains up to 16%.Indian equity markets are currently facing pressures with Nifty50 having corrected by 8% from its peak in September.

The month of October also saw a historic highest sell-off from foreign portfolio investors (FPIs), who offloaded stakes worth Rs 1,13,858 crore.

On the global front, the markets will now also be responding to the US presidential elections, after which fundamentals like US GDP growth, inflation and rate cut by the Fed will influence the market moves.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

September seasonality revealed that the Nifty PSU Bank index was a laggard, ending the month with declines on seven occasions in the last 10 years. Three scrips in the 12-stock index have given a dismal performance, falling more times than the index itself. These are Bank of India (BoI), State Bank of India (SBI) and Bank of Maharashtra. Should you buy, hold, avoid or completely exit them?

While BoI has fallen 9 times in the last 10 years in September, the country’s largest public lender, SBI, has fallen 8 times and so has Bank of Maharashtra. The average returns in September for each of these stocks stand at negative 7.7%, 3.4% and 3.7%, respectively. The biggest fall for them was seen in 2020, which was the Covid-19 year and stocks fell between 23% and 18%.

The next in line are Canara Bank, Indian Overseas Bank (IOB), Punjab & Sind Bank (PSB) and UCO Bank, which have corrected 6 times each. Indian Bank and Bank of Baroda (BoB) have fallen 5 times and 4 times, respectively.

Meanwhile, average returns by Nifty PSU Bank are at negative 3.6% with the biggest September fall of 20.25% in 2020 followed by 18% in 2018. The index fell in 2014, 2015, 2017, 2018, 2019 and 2022 while rising in 2016, 2021 and 2023.

To make matters worse, stocks of public lenders have been on a falling curve for over a month now and experts fear more consolidation going ahead. In the last one month, the PSU Bank index has declined by 2.8%.
The Nifty PSU Bank Index has exhibited a historical tendency to decline in September, Sonam Srivastava, Founder and Fund Manager at Wright Research, said as she sees current valuations as a running concern of the market, expecting corrections to continue with or without seasonality factor playing a role.

Seasonality in the PSU banking sector could be the result of multiple factors at play, including events such as profit-taking, regulatory changes, market conditions and global economic trends. Deviations from the past trends cannot be ruled out, she added.

One-year change in the Nifty PSU Bank index is to the tune of 56%, which is a significant outperformance over Bank Nifty in the same period with 16% returns. The broader Nifty has rallied 30% in the meantime.

The ongoing weakness is on the back of time-wise and price-wise correction, said Dr Ravi Singh, Senior Vice President – Retail Research at Religare Broking. He advised investors to follow the prevailing trend without presuming anything.

The sentiments were echoed by expert Rahul Ghose, CEO of Hedged.in. He expects PSU stocks’ consolidation to continue, calling the past one-year rally “slightly over-done”.

Tailwinds like supportive NIMS (net interest margins) and period of low credit cost is behind, said Kunal Shah, Senior Research Analyst at Carnelian Asset Management & Advisors. He added that profitability improvement in PSU banks on account of recoveries from write-offs was also pacing off. NIM pressure in the short term and NPA issues revolving around agriculture book along with regulatory actions like ECL (expected credit loss) provisioning, could keep the re-rating in check, Shah added.

Brokerage JM Financial in its latest note said it sees a 60% probability of negative returns by PSU banks this time around, in line with the previous trends.

Also Read: Nifty posts negative returns in 6 out of 10 years in Sept; adverse seasonality for FIIs too

Tricks of trade

Decoding the technical charts, Singh of Religare said that the index is on the negative side and is hovering below the 20-day Weighted Exponential Moving Average (WEMA) with the immediate support for the index lying at 6,500 zone.

Ghose of Hedged.in recommended investors not to venture out for public banks as he saw lacklustre movement going ahead. He has only SBI under his radar for a target of Rs 910 and a stop loss of Rs 845. One must initiate the long only above the 850 levels, he suggested.

Singh has a ‘Hold’ on SBI, PSB, Indian Bank, BoB and Canara Bank while an ‘avoid’ on Bank of India, IOB, Uco Bank. This analyst has an ‘Exit’ strategy on Bank of Maharashtra, Central Bank, PNB and Union Bank.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

In a day filled with excitement in the stock market, midcap stocks took center stage by reaching new all-time highs. These remarkable performances by a diverse range of companies reflect the strength and potential of the midcap segment. While these stocks are currently riding high, it’s crucial to remember that the stock market is subject to fluctuations.

The data was sourced from StockEdge at 1:05 p.m., and the updates from the real-time data could come with a lag. The below data also pertains only to the time at which it was taken. (Data Source: StockEdge)

1. Power Finance Corporation
Power Finance Corporation surged to a new all-time high of Rs 254.10.

2. REC
REC Limited reached an all-time high of Rs 285.

3. Indian Bank
Public sector lender Indian Bank touched a record high of Rs 446.50.

4. The Federal Bank
The Federal Bank achieved an all-time high of Rs 151.50.

5. Procter & Gamble Hygiene and Health Care
Procter & Gamble Hygiene and Health Care hit an astounding Rs 17,900, setting a new record.6. Colgate-Palmolive (India)
Colgate-Palmolive (India) reached a new all-time high of Rs 2,096.00.

7. JSW Energy
JSW Energy surged to an all-time high of Rs 444.90.

(Disclaimer: This is an AI-generated article. Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

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Public sector banks (PSBs) have once again posted stellar performance by registering more than double profit of Rs 34,774 crore for the first quarter ended June 2023. During the April-June period of the previous fiscal, all 12 state-owned banks had recorded a total profit of Rs 15,306 crore, according to quarterly numbers published by public sector lenders.

The high-interest regime helped banks to earn a good net interest margin (NIM) during the quarter. Most banks had recorded NIM of over 3 per cent.

Pune-based Bank of Maharashtra posted the highest NIM of 3.86 per cent, followed by Central Bank at 3.62 per cent and Indian Bank at 3.61 per cent during the quarter.

During the first quarter, four lenders logged a profit of over 100 per cent. The highest percentage growth was recorded by Punjab National Bank, which earned a profit of Rs 1,255 crore against Rs 308 crore in the same quarter of the previous year, a growth of 307 per cent.

It was followed by the State Bank of India (SBI), which recorded a 178 per cent bottom line growth at Rs 16,884 crore and the Bank of India with a 176 per cent surge, earned Rs 1,551 crore profit.

SBI’s highest-ever quarterly profit of Rs 16,884 crore is about 50 per cent of the total profit earned by PSBs. During FY23 too, SBI’s contribution was about 50 per cent, when the cumulative profit of these banks was Rs 1.05 lakh crore.

Another five PSBs posted growth between 50 and 100 per cent. This pack was led by Bank of Maharashtra, which clocked a 95 per cent rise in net profit at Rs 882 crore. It was followed by Bank of Baroda recording a growth of 88 per cent to Rs 4,070 crore and UCO Bank by 81 per cent to Rs 581 crore. The only bank out of 12 booked decline in net profit is Delhi-based Punjab & Sind Bank with a 25 per cent drop at Rs 153 crore at the end of June 2023.

Several measures taken by the government have helped in the revival of PSBs. As a result of 4R’s strategy of recognition, resolution, recapitalisation and reforms, non-performing assets of banks have come down to a 10-year low at 3.9 per cent of total advances. At the same time, banks recovered bad loans worth over Rs 8.6 lakh crore in the last eight financial years.

As part of the strategy, the government infused an unprecedented Rs 3,10,997 crore to recapitalise PSBs during the last five financial years — from 2016-17 to 2020-21. The recapitalisation programme provided much-needed support to the PSBs and prevented the possibility of any default on their part.

The reforms undertaken by the government over the last eight years addressed credit discipline, ensured responsible lending and improved governance. Besides, there was technology adoption, amalgamation of banks and the general confidence of bankers.