Public-sector banking index, Nifty PSU Bank, was the top laggard among sectoral indices on January 6 as investors rushed to offload their holdings. The index cracked over three percent as selling pressure mounted on dismal business updates for the quarter ended December 31, 2024.
At 11.20 am, Union Bank was the top loser on the index, tumbling over seven percent to quote Rs 115.14 per share. The bank reported a 3.8 percent year-on-year rise in deposits for the October-Dcember quarter, though deposits fell 2 percent compared to the September quarter.
Advances increased by 5.9 percent from the previous year to Rs. 9.49 lakh crore, with a 2.2 percent sequential growth. The bank’s total global business declined 0.24 percent quarter-on-quarter but grew 4.7 percent year-on-year to Rs. 21.65 lakh crore.
Bank of Baroda shares were lower by 4.9 percent at Rs 229.74 per share. The state-owned bank saw its global business grow 11.7 percent year-on-year in the third quarter, reaching Rs. 25.6 lakh crore. Global deposits rose 11.82 percent year-on-year to Rs. 13.92 lakh crore, while domestic deposits increased by 9.23 percent to Rs. 11.66 lakh crore.
Punjab National Bank reported a 14.4 percent year-on-year growth in domestic deposits for the October-December quarter, closely matching the 14.1 percent rise in its domestic loan portfolio. Sequentially, advances grew 5 percent, slightly outpacing the 4.2 percent growth in deposits. Despite this, the stock tumbled 4.2 percent to quote Rs 101.95 per share.
All other index constituents, such Central Bank, Bank of India, SBI, Indian Overseas Bank and others, were trading with sharp cuts, ranging from 2-4 percent.
Jignesh Shial, Director - Research at InCred Capital said, "Private banks and NBFCs are now gradually outperforming as asset quality concerns appear manageable and deposit growth is improving, with reported deposit growth outpacing advances."
Shial pointed out that while growth is slowing, the market has already factored in a softer second half, and the Reserve Bank of India's concerns around deposits seem to be resolving. He added that FY26 will perform better than FY25 and sees increased investor interest in high-quality private banks and NBFCs.
Nifty PSU Bank: Levels to watch
Milan Vaishnav, founder of Gemstone Equity Research and Advisory Services and ChartWizard FZE, reflected on this downward trend by saying that he expects it to continue for a bit more since having touched its peak last June.
"Last six months, it's been trading sideways and under a mildly corrective decline. So what has happened is that it has stayed sideways over the past six months and is now below all three averages. Therein, we can fairly expect the PSU bank index to at least stay sideways, i.e., mildly down, and not show any runaway kind of a move there," he said.
He further added, saying, "If you look at the long-term charts, it is in a secondary downtrend and has its support around 6100 levels. So, there are chances that we may see PSU bank index drifting lower, staying close to 6100. We may see banks performing on individual basis (on absolute terms); may stay highly stock specific. But the sector, as a whole, might continue to stay relatively weaker until and unless so long as PSU bank index is below 7000."
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