Nifty PSU Bank index gains 4%; SBI, BOB, Canara Bank up over 3%

Shares of public sector banks were in focus with Nifty PSU Bank index gaining almost 4% as compared to 0.54% rise in the Nifty 50 index on Monday at 01:43 pm.
State Bank of India (SBI), Canara Bank, Bank of Baroda, Syndicate Bank, Union Bank of India and Union Bank of India from Nifty PSU Bank index were up more than 3%, while Indian Bank, Punjab National Bank (PNB), Oriental Bank of Commerce and Andhra Bank up in the range of 1% to 3% on the National Stock Exchange (NSE).

Nifty PSU Bank index had underperformed the market by falling 27% thus far in the calendar year 2018, against 5% decline in the benchmark index till Friday.
PSU banks have sold off 32% since the 25-January peak (Nifty down 10%) and retraced the entire post-recap gains. This was driven by a confluence of bad news – a large fraud at PNB, tighter provisioning norms from the Reserve Bank of India (RBI) and continued pressure from bond yields.
We are now agnostic between BOB and SBI – SBI has a better deposit profile and fewer challenges on the overseas book but BOB’s provisioning position is better, analysts at JP Morgan said in a report.

“State owned banks have witnessed sharp decline in their return ratios since FY14. They earned negative returns in FY16 and FY17 due to elevated levels of loan losses.