Budget Day Blues: Nifty PSU Bank Index Suffers Steep 6% Fall

Key Highlights:

Sharp decline in PSU banks: At 12:45 PM IST, the Nifty PSU Bank Index was down 6%, marking one of the steepest intraday falls in recent months. Heavyweights such as State Bank of India, Bank of Baroda, and Punjab National Bank led the decline.

Budget impact: The sell-off followed Finance Minister Nirmala Sitharaman’s Budget 2026 announcements, particularly higher borrowing estimates and fiscal outlay targets. Analysts noted that concerns over rising government debt could pressure PSU banks, which are primary lenders to infrastructure and welfare projects.

Broader market reaction: The weakness in PSU banks added to overall market volatility, with the Sensex down nearly 800 points and the Nifty 50 slipping below 25,100 earlier in the session. Midcap and financial indices also saw sharp corrections.

Investor sentiment: Market experts suggest the decline reflects short-term caution rather than structural weakness. While PSU banks face near-term headwinds, long-term prospects remain tied to credit growth, government recapitalization, and digital banking initiatives.

Outlook: Traders are advised to monitor bond yields and fiscal deficit trends, which will influence PSU bank valuations in the coming weeks.

Sources: Reuters Market Update, NSE India Market Watch, Economic Times LIVE Markets, Business Standard