While benchmark Nifty 50 gave high double-digit returns in 2023, the sector with the highest weightage in the index did not lead the bull run.
Year-to-date, the Nifty 50 has given close to 18% returns, whereas the Nifty Bank index gave a little over 10% returns. This underperformance was largely due to the moderate rise in leading private banks.
But if we broaden the analysis, second rung private sector banks did extremely well and even beating them was the entire public sector banking pack.
Year-to-date, the Nifty PSU Bank index gave 30% returns, whereas the Private Bank index gave 12% returns.
Public Sector Banks Over the past few years, public sector banks have transformed themselves into better and more sustainable franchisees.
Sustained credit growth, significant improvement in the asset quality, and stable to higher margins drove the robust earnings performance of state-owned banks and subsequently the share prices.
Barring State Bank of India, all the other listed PSU banks rallied 22-62% year-to-date.
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