PSU Bank index slips 5% on Tuesday: What led to the sharp fall?

In a choppy session today, the Nifty PSU Bank index emerged as the laggard, settling with a cut of nearly 5 per cent, dragged by counters including Bank of Baroda, Punjab National Bank and Canara Bank among others.

All of the 12 constituents ended in the red, with a drag between 2-11 per cent.

Vaibhav Vidwani, Research Analyst at Bonanza Group attributed the decline in PSU banking stocks to the Bank of Baroda’s lower-than-expected Q4FY25results. Bank of Baroda reported a net interest income (NII) of Rs 11,020 crore, while the average estimates were Rs 11,600 crore. 

So that was the reason which brought pessimism in PSU banking stocks today, he added.

Technical view

Kunal Kamble, Sr. Technical Research Analyst at Bonanza Group said, “The Nifty PSU Bank Index faced rejection from its falling trendline and closed below its major exponential moving averages (EMAs), indicating a negative trend. Weak earnings from Bank of Baroda triggered panic selling across other PSU banks amid concerns over broader underperformance, which contributed to the ongoing correction in the sector.”

From a technical perspective, the MACD line has crossed below the signal line, suggesting a shift in momentum and a potential trend reversal. The index is currently hovering near a crucial support level at 5910. A breakdown below this level may confirm a deeper correction

At this stage, it is advisable to avoid fresh entries and consider exiting existing positions. A sustained move above the 6770 level would be required to signal a meaningful recovery in the sector, he added.