PSU bank stocks reached their highest point of 6% on June 2, 2025 because investors showed strong confidence before the Reserve Bank of India’s (RBI) Monetary Policy Committee meeting. The Nifty PSU Bank index experienced a 2.5% intraday increase which exceeded broader market indices while demonstrating investor faith in an upcoming interest rate reduction.
The market expectations of a 25 to 50 basis point repo rate cut emerged because of declining inflation and strong GDP growth. The RBI is expected to adopt a more accommodative stance because retail inflation decreased to 3.16% in April and Q4 FY25 GDP reached 7.4%. The PSU bank sector benefits from rate cuts and improved liquidity because these factors drive credit growth and profitability.
The positive market sentiment increased because net GST collections increased by 20.4% year-over-year to reach ₹1.73 trillion in May which demonstrates strong government revenue and economic activity. The stock prices of Indian Bank and Bank of Maharashtra and UCO Bank and others increased between 3% to 7% because investors regained their confidence.
The combination of policy support with improved fiscal indicators and decreasing inflation has established a positive setting for PSU banks to maintain their growth trajectory.
