PSU Bank Index Surges to Record High on Strong Q3FY26 Bank Results
Overview
The Nifty PSU Bank index hit a record high, soaring 2% on strong Q3FY26 results from Union Bank of India and Bank of Maharashtra. The index surpassed its previous peak as robust credit growth, improved asset quality, and healthy net interest income propelled public sector banks higher, outperforming the broader Nifty 50.
Stocks Mentioned
PSU Banks Scale New Heights
The Nifty PSU Bank index reached an unprecedented record high of 8,912.30 on Wednesday, marking a 2 per cent surge during intra-day trading. This significant ascent comes after Bank of Maharashtra and Union Bank of India reported robust business growth and improved asset quality for the quarter ended December 2025.
Outperforming the Broader Market
By 02:34 PM, the PSU Bank index stood 1.7 per cent higher at 8,875.80. This performance sharply contrasts with the broader Nifty 50, which declined by 0.44 per cent. The index decisively broke its previous high of 8,856.85, previously set on January 6, 2025.
Key Bank Performances
Union Bank of India experienced an 8 per cent jump, reaching ₹180 on the NSE. Bank of Maharashtra traded up 4 per cent at ₹67.75, alongside Indian Bank (₹849.90), Indian Overseas Bank (₹36.77), and Punjab & Sind Bank (₹28.26). Other major public sector lenders including Punjab National Bank, Central Bank of India, Canara Bank, Uco Bank, and Bank of Baroda saw gains ranging from 2 per cent to 3 per cent.
Driving Forces Behind the Rally
Bank of Maharashtra reported substantial year-on-year growth. Gross advances rose by 19.6 per cent to ₹2.73 trillion, fueled by retail, agriculture, and MSME segments. Total deposits climbed 15.3 per cent to ₹3.2 trillion. Net interest income grew by 16.2 per cent to ₹3,422 crore, with Net Interest Margins (NIMs) stable at 3.86 per cent. Asset quality showed marked improvement, with Gross NPA falling to 1.60 per cent and Net NPA to 0.15 per cent.
Union Bank of India's Growth Metrics
Union Bank of India announced an 8.97 per cent year-on-year net profit increase, reaching ₹5,017 crore for Q3FY26. Net interest income edged up 1 per cent to ₹9,328 crore. Gross NPAs reduced by 79 basis points year-on-year to 3.06 per cent, with net NPAs at 0.51 per cent.
Analyst Perspectives
Analysts noted the strong credit momentum and profitability. ICICI Securities highlighted Bank of Maharashtra's strategy for margin stability and sustained returns, maintaining a BUY rating with a revised target price of ₹80. Brokerage firms like Systematics Institutional Equities also revised estimates upward, reflecting strong advances growth.
