PSU banks fall as Budget had no proposal for fresh capital infusion

The PSU Bank index underperformed the market, falling more than 1% as Finance Minister Nirmala Sitharaman proposed no capital infusion into PSU banks this year, did not set aside money for public sector banks (PSBs), and did not provide clarity on the privatisation roadmap in her Budget speech on February 1, 2022.

She had announced a Rs 20,000 crore capital infusion for PSBs in Budget 2021. State-owned banks account for 60% of assets in the Indian banking sector and 90% of stressed assets.

The Nifty PSU Bank fell more than 1%, led by Union Bank of India, Bank of Baroda, Bank of Maharashtra, and Indian Overseas Bank, which each fell 1.5-5.5%. State Bank of India, Punjab National Bank, and Canara Bank all saw their share prices fall by more than 1%.

The gross non-performing assets (GNPAs) of scheduled commercial banks (SCBs) fell from 8.2% in March 2020 to 7.3% of March 2021, and then to 6.9% in September 2021, according to the Reserve Bank of India (RBI) in its Trends and Progress of Banking in India 2020-21 report released on December 28.

The Sensex is now trading at 58,379.62, up 365.45 points or 0.63%, after ranging between 58,242.44 and 59,032.20. On the index, there were 21 stocks that advanced and 9 stocks that declined. The Nifty is trading at 17,429.40, up 89.55 points or 0.52%, after trading in a range of 17,392.85 and 17,622.40. On the index, there were 31 stocks that advanced and 19 stocks that declined.

The broader indices were trading in the green with the BSE midcap index rising 0.17%, while the small-cap index was up by 0.13%. The top gaining sectoral indices on the BSE were Metal up by 2.05%, Basic Materials up by 1.37%, Healthcare up by 1.24%, Capital Goods up by 1.24% and FMCG was up by 0.97%, while PSU down by 1.47%, Auto down by 1.23%, Oil & Gas down by 1.14%, Telecom down by 0.49% and Energy was down by 0.42%.