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.
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.
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.
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