PSU Bank Stocks Slide: Indian Bank, BOB, SBI Drag Nifty PSU Bank Index Down 8% in 2 Days

Shares of public sector banks (PSBs) continued to decline for the second straight session on Monday. The Nifty PSU Bank index fell around 2–2.4% intraday, taking the 2-day fall to nearly 8%, largely due to profit booking after a strong recent rally.

Indian Bank, BOB, and SBI Lead The Fall

Indian Bank dropped about 4% intraday to ₹810, extending its two-day loss to nearly 11% after hitting a record high of ₹923 on January 30, 2026.

Bank of Baroda (BOB) slipped nearly 3% to around ₹270, down about 10% in two sessions. State Bank of India (SBI) also declined close to 3% to ₹990, with an 8% fall over the past 2 days, after touching an all-time high of ₹1,083.60.

Other PSU banks such as Punjab National Bank, UCO Bank, Punjab & Sind Bank, Indian Overseas Bank, and Union Bank of India were also down around 2% each.

Still Strong Over The Medium Term

Despite the recent correction, PSU bank stocks have delivered strong gains. Over the past 5 months, the Nifty PSU Bank index has risen 21%, clearly outperforming the Nifty 50, which gained just 1% during the same period.

Budget Signals Reforms And Disinvestment

Under Union Budget 2026–27, the government plans to set up a high-level banking committee to review the sector’s structure under the Viksit Bharat vision. The panel may look at bank consolidation, ownership rules, voting rights, and foreign investment limits to strengthen balance sheets and improve capital efficiency.

The Centre has also set a ₹80,000 crore disinvestment and asset monetisation target for FY27, sharply higher than FY26. This may include stake sales in IDBI Bank, LIC, and select PSU banks to meet public shareholding norms.

Read More: India’s Cotton Imports Surge 158% YoY in December Quarter Amid Duty-Free Import.

Market Sentiment And Taxes

Hike in securities transaction tax (STT) has weighed on market sentiment, though it could help curb speculative trading. At the same time, clarity on GST for domestic brokers was seen as marginally positive.

Conclusion

The sharp fall in PSU bank stocks reflects short-term profit booking after a strong rally. 

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