PSU Bank Stocks Rally 2026: Nifty PSU Bank Index Hits 9,665; SBI & PNB Near 52-Week Highs

Mumbai, February 21, 2026 — The Indian banking sector is witnessing a historic "Sarkari Bank" rally this February. The Nifty PSU Bank Index closed at a stellar 9,665.80 on Friday, up by 1.68%, marking its sixth consecutive month of growth. Market analysts attribute this momentum to record-breaking Q3 FY26 profits and a significant improvement in asset quality across state-owned lenders.

1. Market Data (Closing Prices: Feb 20, 2026)

Stock Name	LTP (Last Traded Price)	1-Day Change	52-Week High	YTD Return (2026)
SBI (State Bank of India)	₹1,216.20	+0.87%	₹1,225.50	+16.5%
PNB (Punjab National Bank)	₹129.45	+2.66%	₹135.15	+11.4%
Bank of Baroda (BOB)	₹309.05	+1.51%	₹313.35	+10.2%
Union Bank of India	₹171.70	+1.50%	₹175.40	+16.4%

Also Read: Best PSU Bank Dividend Stocks 2026: SBI, PNB, and Canara Bank Report Record Profits

2. Factors Driving the "PSU Fever" in 2026

The current rally is supported by fundamental shifts in the banking landscape:

Historic Q3 Earnings: SBI led the pack with its highest-ever quarterly standalone net profit of ₹21,028 crore for Q3 FY26, a 24% YoY growth.
Clean Balance Sheets: The average Net NPA ratio for major PSU banks has hit a multi-year low, with corporate credit stress appearing almost negligible in current books.
Infrastructure Financing: As per the 2026-27 Budget focus, increased credit demand for large-scale government projects has provided a massive boost to the credit-to-deposit ratio of state banks.

3. Expert Market Outlook for Q1 2026-27

While the index is at a record high, analysts suggest monitoring the following key levels for price action:

SBI: Currently consolidating near its lifetime high. Analysts see a strong psychological support zone around ₹1,180.
PNB: Showing strong momentum after breaking past previous resistance. Key level to watch is ₹135.
Sector Trend: If the Nifty PSU Bank Index sustains above 9,700, it may open doors for a further 5-7% upmove in the mid-tier segment.

4. Key Points for Investors to Watch

Valuation Re-rating: Many mid-cap PSU banks are still trading at a lower Price-to-Book (P/B) ratio compared to private peers, attracting value investors.
Dividend Announcements: With record profits, several PSU banks are expected to announce significant dividends in the upcoming April-May 2026 cycle.
Global Cues: Investors are keeping a close watch on global interest rate trajectories which could influence domestic liquidity.

Disclaimer: This report is for informational purposes only and does not constitute financial advice or an endorsement to buy or sell securities. Stock market investments are subject to market risks. Please consult a SEBI-registered financial advisor before making any investment decisions.