Nifty PSU Bank logs best one-day gains so far this year; settles over 4% higher

Nifty PSU Bank in Monday's trade (November 25) ended sharply higher by over 4 per cent. The Mahayuti win in Maharashtra is said to have instilled a positive sentiment so far being dragged amid a host of negative factors such as consistent FPI exodus, weak Q2 earnings, higher dollar index as well as risk-off sentiment.

Vinod Nair, Head of Research, Geojit Financial Services underscore that major state election results lifted market sentiment and increased the scope of stability in government spending in H2FY25 to meet the capex target. The rally was broad-based, while capex-linked sectors like infra, capital goods, and industrials outperformed in expectation of a surge in new order inflows. The prospects of H2 remain positive due to a good monsoon, festival, and marriage season, which could ease the impact of earnings downgrades that happened in Q2.

Nonetheless, PSBs also stole the limelight in today's session and marked its best daily gains so far this year.  Atul Parakh, CEO of Bigul attributed today's sharp gains in public sector bank to political stability, attractive valuations, positive broader market trends, and improving economic indicators.

As these factors converge, they create an environment ripe for investment in PSBs, making them an appealing choice for investors looking to capitalize on the current market dynamics. Monitoring these developments will be crucial for assessing the sustainability of this upward momentum in PSB stocks, he added.

From the pack constituted by 12 stocks, all of them ended in the green with gains up to 9 per cent. Central Bank of India was the top gainer in the pack surging up to 9 per cent.

While other notable stocks that led the gains were counters like Indian Bank, UCO Bank and Bank of Baroda, each ending over 5 per cent higher in trade today.