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PSU Stocks Pressured, Bank of Maharashtra Breaks Out with 4% Rally

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  //business-finance.news-articles.net/content/202 .. bank-of-maharashtra-breaks-out-with-4-rally.html
  Published in Business and Finance on Wednesday, December 3rd 2025 at 7:16 GMT by Zee Business

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PSU stocks feel the squeeze – but Bank of Maharashtra shows resilience and a brokerage sees a 26 % upside for the sector

On Thursday, the PSU segment of India’s equity market showed a mixed picture. While most of the state‑owned conglomerates were trading lower, the shares of Bank of Maharashtra (BOM) broke out of the downward trend and recorded a fresh 4 % rally. A research note from a leading brokerage highlighted a potential upside of up to 26 % for the entire PSU sector, hinting that the current dip could be an entry point for investors.

Market backdrop

The day’s market action began in the early hours with the Nifty PSU 100 index slipping by 0.6 %. The decline was largely driven by negative sentiment around the government’s ongoing deliberations on the privatisation of certain state‑run banks and power companies. Market analysts noted that concerns about a potential breakup of the State Bank of India (SBI) and the divestment plans for Power Grid Corporation (PGC) weighed heavily on investor confidence.

Another factor was the RBI’s recent announcement that the Monetary Policy Committee would review the policy rates in light of the inflationary environment. The looming possibility of a rate hike added a layer of caution, prompting many traders to short the PSU names that are highly sensitive to interest‑rate changes.

The overall macro backdrop also contributed to the sectoral pressure. Global markets were still grappling with supply‑chain disruptions and the lingering effects of the COVID‑19 pandemic. In India, the Reserve Bank of India’s policy meeting scheduled for the next week heightened uncertainty, leading to a sell‑off in risk‑off assets, including PSUs.

Bank of Maharashtra – a bright spot

Despite the negative sentiment prevailing across the PSU spectrum, Bank of Maharashtra’s shares performed admirably. The bank’s 52‑day moving average crossed a key support level, which gave traders a green flag to buy. The share price rose to Rs 104.50 from Rs 100.80 at the open, delivering a 4 % gain.

Analysts from the brokerage highlighted several reasons for BOM’s outperformance:

• Strong fundamentals – BOM’s latest quarterly earnings showed a 12 % rise in net profit, buoyed by higher interest income and a decline in loan loss provisions.
• Improved capital base – The bank’s CET1 ratio climbed to 13.5 %, surpassing the regulatory minimum of 12 %.
• Better credit quality – Non‑performing assets (NPAs) fell to 1.2 % of total advances, a notable improvement over the 1.6 % reported in the previous quarter.

The brokerage’s research note also pointed out that BOM’s loan book is heavily skewed towards the retail and small‑business segments, which are expected to benefit from the government’s focus on financial inclusion. The bank’s aggressive branch‑less strategy has also helped reduce operating costs and increase digital penetration, a trend that is likely to continue.

Brokerage sees a 26 % upside for the PSU sector

In the research note attached to the article, the brokerage’s equity research team painted a more optimistic picture for the PSU sector. The note, which was linked to the article, suggested a 26 % upside for the PSU index, based on a number of macro and micro factors:

1. Debt‑to‑equity improvement – The government has pledged to reduce the debt of public banks by 20 % over the next four years. This would likely improve profitability and credit ratings.
2. Government stimulus – Upcoming infrastructure spending is expected to benefit PSU power companies like NTPC and Power Grid Corporation, leading to higher revenue growth.
3. Regulatory support – RBI’s recent relaxation on liquidity norms and provision for stressed assets could improve banks’ earnings.
4. Improved earnings – The average earnings per share (EPS) of PSU stocks has grown by 4 % year‑on‑year, signalling a healthy profit outlook.

The brokerage’s target price for the PSU index is set at 1,050 points, a 26 % jump from the current level of 835. The note emphasised that investors should watch for a potential breakout from the current support zone near 825 points.

Other PSUs in focus

While BOM was the star of the day, other PSU names such as State Bank of India, Power Finance Corporation (PFC), and GAIL were still battling lower trading ranges. RBI’s recent policy meeting raised concerns about the potential impact on the banking sector’s interest margins, pushing these stocks lower.

Conversely, Power Grid Corporation managed to hold its ground with a modest 0.8 % gain, owing to a bullish outlook on renewable energy demand. GAIL’s shares fell by 1.6 % after a corporate action announcement that diluted its shares.

Investor takeaway

The article from Zeebiz offers a balanced view of the current PSU environment. On the one hand, macro‑economic uncertainties and policy debates are putting downward pressure on most state‑owned companies. On the other hand, Bank of Maharashtra’s strong fundamentals and the brokerage’s bullish outlook suggest that the sector still carries upside potential.

For investors, the takeaway is that the current dip might present a buying opportunity, especially for value‑oriented investors who see long‑term prospects for PSUs. However, caution is advised given the market’s sensitivity to policy changes and interest‑rate movements.

In summary, the PSU sector remains in a state of limbo: a bearish trend is visible, but bright spots like BOM and an attractive upside projection from a respected brokerage hint that the market may soon rebound. The key will be to monitor RBI policy announcements, government budget allocations, and individual company earnings for signs of a sustained turnaround.