Why PSU Banks Are Outperforming Private Banks Right Now

Banking stocks, particularly PSU banks, are showing strength alongside the Nifty Bank index, even as the earnings season gathers pace. Prashanth Tapse, Senior VP – Research Analyst at Mehta Equities, said the outlook for PSU banks remains very positive for the medium to long term, citing healthy deposit and credit growth from banks that have already reported results. He noted that PSU banks are now behaving more like private lenders, while private banks have relatively underperformed in comparison. Tapse said names like Canara Bank, Bank of Baroda and Union Bank remain key picks. On large private banks, he said expectations from HDFC Bank earnings are high but credit growth could disappoint, while ICICI Bank may deliver relatively better performance.