Nifty Psu Bank Index sees second biggest decline in 2022, ends as top sectoral loser | Popgen Tech

Friday’s decline was the second biggest drop for the Bank PSU index in 2022, after the 8 percent plunge on February 24.

After a stellar run over the past few weeks, the index fell for the seventh consecutive session on Friday. All the constituents of the index ended with losses between 1-15 percent, led by the Indian Overseas Bank.

Here’s how the PSU Bank index constituents fared on Friday:

Since reaching a peak of 4,617.40 on December 15, the index has corrected almost 1,000 points in the next six trading sessions, falling close to 15 percent.

The PSU Bank index continues to be one of the best performing sector indices this year. At its peak, the index more than doubled from its 52-week low of 2,283.

The main reason behind the increase was a steady decline in gross non-performing assets (NPAs) or “bad loans” across their balance sheets.

Net NPAs were even lower than they were in 2016, that is before the asset quality review (AQR) started in 2017 by the Reserve Bank of India (RBI).

Moreover, PSU banks have steadily increased their profits and their loan books as well. The latest reading is nearly 17 percent in the last three months available.

PSU banks as a space was not anticipated to do well this year, according to Anshul Saigal of Kotak PMS. “If you were in the right stocks this year, obviously you made a lot of money, look at what happened to the PSU banking space,” he said.

Vijay Chopra of Enoch Ventures believes that banks like Canara Bank, Bank of Baroda or even SBI are great buys in such a correction. Union Bank, Canara Bank and SBI are his top picks from within the space.

Market Expert Anand Tandon expects PSU Banks to continue to do well and believes that the correction in these banks is more or less done. He expects the facing corporate banks to do well going forward.