UCO Bank, Central Bank rise up to 9% in trade: here's why PSBs are surging

Public sector bank (PSB) shares jumped up to 9 per cent in trade on Wednesday, December 4, 2024. At around 11:40 AM, the Nifty PSU Bank index was up 0.92 per cent at 7,041.90. In comparison, the NSE Nifty was up 0.37 per cent at 24,547.15. During the day, Nifty PSU Bank registered an intraday high of 7,078.1. On the index, all 12 stocks advanced. 

 

Among others, UCO Bank and Central Bank gained over 9 per cent and over 7 per cent respectively. Indian Overseas Bank shares were up over 6 per cent, and Punjab & Sind Bank shares were up over 5 per cent. 

 

 

Ambareesh Baliga, independent analyst, attributed the positive momentum ahead of the policy decision by the Reserve Bank of India (RBI) this week. 

 

"The PSBs are rising possibly as the market is expecting something positive in the monetary policy decision on speculations that this will be the last term of RBI Governor Saktikanta Das," said Baliga. 

 

The December meeting of the RBI’s six-member Monetary Policy Committee (MPC) began today and the policy decision will be out on Friday, December 6. 

 

Until now, there is no clarity on whether Governor Shaktikanta Das, the chair of the panel, will continue in office after his term ends this month. 

Meanwhile, Minister of State for Finance Pankaj Chaudhary on Tuesday said that the government is not considering a merger of public sector banks and will take several steps to strengthen the financial condition of PSBs.

 

Chaudhary said the reforms undertaken by the government in the banking sector have created systemic improvements and instituted checks and controls to minimise the risk of recurrence of excessive stress. 

 

That apart, Deepak Jasani, sr VP - head of retail research, HDFC Securities Ltd believes that Lok Sabha's approval of the Banking Laws (Amendment) Bill, 2024, is boosting a rally in PSBs.

 

"On Tuesday, the Lok Sabha approved the Banking Laws (Amendment) Bill, 2024, which is pushing the PSB stocks upward. It may be a small trigger, but, the market conditions are such that a minuscule reason is impacting the whole pack," said Jasani.

 

The Lok Sabha approved the Banking Laws (Amendment) Bill, 2024, on Tuesday. It was tabled in the House by Union Finance Minister Nirmala Sitharaman.

 

The Bill proposes 19 amendments to banking laws, including the Reserve Bank of India Act, Banking Regulation (BR) Act, and Banking Companies (Acquisition and Transfer of Undertakings) Act.