State-owned banks have emerged as top picks in the Indian stock market in 2025, sharply outperforming their private peers. Investors remain optimistic that a pickup in credit growth, recovery in margins, and strengthening asset quality will continue to support earnings momentum and re-rating prospects for the sector.
Key Highlights
Half of the constituents of the Nifty PSU Bank index have delivered returns of over 20%, with some on track to extend their annual rally for a fifth consecutive year. The Nifty PSU Bank index has gained 28% in 2025, outperforming the benchmark Nifty 50, which has risen 10% over the same period.
Top Performers
- Canara Bank: 49% surge, on track to record its biggest yearly jump since 2022
- Indian Bank: 47% surge, amid sustained demand since 2021
- Bank of India: 41% return, rebounding from last year's losses
- Union Bank: 28% surge, marking its fifth straight year of positive gains
- State Bank of India: 23% return, pushing the bank's market capitalisation past ₹9 lakh crore for the first time
Outlook
The Reserve Bank of India's key policy rate cut and the government's consumption tax reduction are expected to support loan growth and margin recovery. Full-year loan growth is projected at 13%, while credit costs are expected to remain stable.
Remember, this is perspective, not prediction. Do your own research and consult with certified experts before making any investment decisions.