Nifty PSU Bank Index Surges 2.3% on Strong Institutional Buying and FDI Optimism

On November 3, 2025, India's Nifty PSU Bank Index witnessed a notable rise of 2.3%, reflecting continued investor confidence in the public sector banking space. This surge was underpinned by strong institutional buying, improved asset quality among PSU banks, and speculation around the government likely raising the foreign institutional investment (FII) cap from 20% to 49%. If approved, this regulatory move is expected to attract significant passive foreign inflows, estimated around $4 billion, benefitting major banks like SBI, Bank of India, and Canara Bank.

 

The rally comes after a strong run in recent months, with the index climbing nearly 20% since August and adding about Rs 2.3 lakh crore to its market capitalization. Several PSU banks reported robust loan book growth, outpacing industry averages, which further bolstered market sentiment. The possibility of PSU bank mergers and index rebalancing also contributed to the positive momentum.

 

This uptick contrasts with broader market caution, underscoring PSU banks as standout performers in 2025. Analysts note that valuations remain attractive, enhancing the appeal for both domestic and foreign investors.

 

Key Highlights

Sources: Economic Times, Moneycontrol, CNBC-TV18, Angel One market updates