PSU banking stocks continued to ride the bull wave for the third straight session on Wednesday, February 18, even as the broader markets remained range bound.
After rising 2.11% in the previous session, the Nifty PSU Bank index advanced another 1.54% to hit a fresh record high of 9,647, taking its three-day cumulative gain to nearly 5.22%.
All 12 constituents of the index were trading higher, led by Punjab National Bank, which jumped 3.15% to the day’s high of ₹128.75 apiece. Indian Overseas Bank, Punjab & Sind Bank, Bank of Maharashtra, Union Bank of India, UCO Bank, and Canara Bank also traded with gains of over 2%.
Notably, Bank of Maharashtra, Union Bank of India, Indian Bank, and Bank of India reached fresh 52-week highs during the session.
Meanwhile, SBI’s share price was trading with a marginal gain of 0.21% at ₹1,216 apiece. Earlier this month, the market capitalisation of the country’s largest bank surged past ₹12 lakh crore, making it the fourth most-valued listed company in the Indian stock market.
The milestone was supported by an unbroken seven-month winning streak, during which the stock gained 53%.
Meanwhile, the Nifty Bank index was also hovering near its record high of 61,764, just 0.50% away from that level based on the day’s high.
The rally across banking stocks has been underpinned by robust December quarter earnings, supported by an acceleration in system-wide credit growth, margin recovery, and improved asset quality.
Although the Union Budget 2027’s higher borrowing plan for the next fiscal year triggered panic selling earlier this month, the stocks have since staged a strong comeback.
Credit growth accelerates in Q3; analysts see momentum continuing
Domestic brokerage firm JM Financial, in its recent report, said the banking sector reported a steady improvement in 3QFY26 performance, characterised by broad-based acceleration in credit growth, resilient margins, and continued benign asset quality.
It highlighted that PSBs continued to lead systemic growth at around 15% YoY, with their outperformance over private banks widening in 3QFY26. The brokerage added that banks under its coverage universe reported loan growth of 13% YoY, higher than the 12% YoY growth recorded in Q2FY26.
Axis Securities also said PSU banks under its coverage saw credit growth outpace larger private banks during the quarter. The higher credit growth, according to the brokerage, was mainly driven by the retail and secured SME segments, while corporate loans showed gradual signs of revival.
The outlook for unsecured segments has turned optimistic, Axis Securities said, with lenders indicating better disbursement momentum going into Q4 and growth picking up meaningfully from FY27 onwards.
On the asset quality front, JM Financial said trends remained resilient across the sector, with stable slippages in 3QFY26. Credit costs moderated further, supported by stable corporate portfolios, improving retail collections, and gradual normalisation of stress in the microfinance segment.
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