Indian state-owned banks slide as investors parse federal budget

Bank of Maharashtra

01/02/2026 08:18

Updates

** Indian state-owned banks index .NIFTYPSU drops 3.7%, all 12 constituents down

** Posts biggest decline among major sectoral indexes, while Nifty 50 .NSEI down 1% post federal budget

** "Govt has set up a high-level committee to review the banking sector, and this committee could potentially be mandated to look for mergers among public sector banks. Historically, bank mergers tend to create near-term drag on performance," said Anand Dama, head, BFSI Research, Emkay Global

** India will borrow record 17.2 trillion rupees ($187.63 billion) in 2026–27, above most market estimates

** Higher gross market borrowings could keep bond markets under pressure, which would reduce treasury gains for PSBs, Dama added

** Bank of India BOI.NS and Bank of MaharashtraBMBK.NS  biggest losers, down 6.5% and 5%, respectively

** State Bank of India SBI.NS drops 4%

** Sub-index rose 5.7% in January vs .NSEI 3.1% drop

($1 = 91.6710 Indian rupees)

 (Reporting by Nishit Navin and Nandan Mandayam in Bengaluru)

 ((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))