“After being severely impacted during the previous corporate cycle, PSBs are gradually improving their asset quality,” said Haitong’s analysts Darpin Shah and Nikhil Vaishnav in a note to clients. “Further, these banks are more focused on better-rated corporates and granular loans, which provides some comfort on the asset quality here-on.”
NSE’s Nifty PSU Bank index surged almost 4% on Tuesday as against the 1% gain each in Bank Nifty and benchmark Nifty. Indian Bank, and jumped 5-6% each.
“While the restructured book remains slightly higher than comparable private peers, it remains lower than the previous cycle, which provides additional comfort,” said the brokerage’s analysts.