PSU bank shares shoot up due to good Q4 numbers, low price and increased safety when comparing it to private banks in the Indian banking sector.

Over the past month, the shares of Public Sector Undertaking (PSU) banks have climbed noticeably on Dalal Street. A lot of investors are buying into PSU banks because of their good finances, low prices and seeking safe options after a private sector bank had accounting issues.

The share price of Punjab National Bank (PNB) increased by nearly 10% and Bank of India’s shares went up 6.6%. Smaller PSU banks, for example Punjab and Sind Bank, also increased deposit growth by 12.5% for the quarter. Against the Sensex which was mostly unchanged, the midcap index market grew strongly during this period.

In the last quarter of March, PNB’s profits went up 51.7% to reach Rs 4,567 crore, while Bank of India reported an 82.5% rise to Rs 2,625.9 crore. Likewise, some private sector banks had different experiences, as Axis Bank made no profit and IndusInd Bank lost money because of recent accounting concerns.

Going forward, many experts expect the RBI to ease interest rates by 25 basis points which should benefit the economy and make borrowing more affordable. Net interest margins at PSU and private banks will draw a lot of attention from investors going forward.

Although PSU banks have improved in recent times, their share prices are lower than those of private banks, meaning investors might find value for the long run.