Select PSU stock rally lifts sector’s market share to 17-month high  

markets

• PSU stocks' BSE market cap share reached 14.97% in Jan 2026, a 17-month high.
• Rise driven by select banking, defence, metal, and commodity PSU stocks
• Hindustan Copper led gains, surging over 210 percent in the past year

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Despite limited participation across the PSU universe, the share of PSU stocks in the total market capitalisation of BSE-listed companies has risen to a 17-month high, driven by gains in select stocks.

As of January 2026, PSU stocks accounted for 14.97 percent of the total mcap of all BSE-listed firms, the highest level since August 2024. This marked an increase from 13.93 percent recorded a month earlier. However, the current share remains below the peak of 16.76 percent reached in July 2024.

The combined mcap of 96 listed PSU companies stood at Rs 68.61 lakh crore in January 2026, reflecting a rise of nearly Rs 16 lakh crore from the February 2025 low of Rs 52.63 lakh crore. In comparison, the total mcap of PSU firms was Rs 66.31 lakh crore in December 2025 and Rs 66.04 lakh crore in November 2025.

Interestingly, this rise came despite the rally remaining limited to select banking, defence, metal and commodity stocks, with several other PSU counters continuing to trade weak over the past year.

The PSU defence segment has traded higher on expectations of increased government spending amid ongoing geopolitical tensions. PSU banks have also seen strong performance due to the valuation gap with private sector banks, along with improved operational performance relative to private peers. The commodity segment has gained momentum as the global commodity cycle turned favourable, supporting improved realisations across the sector.

Out of the 96 listed PSU companies, 39 stocks are trading higher on a year-on-year basis, while the remaining 55 stocks are in the red. Among the gainers, nine stocks have risen between 1 and 10 percent, eight stocks have gained 10 to 20 percent, 13 stocks have advanced 20 to 50 percent, and nine stocks have surged more than 50 percent over the past year.

Hindustan Copper emerged as the top performer, rising more than 210 percent during the period. Tourism Finance Corporation and National Aluminium Company followed, gaining over 120 percent and 108 percent, respectively. Other major gainers include Canara Bank, Indian Bank and Union Bank of India, each of which advanced more than 50 percent. Chennai Petroleum Corporation, Garden Reach Shipbuilders and Bharat Electronics posted gains in the range of 53 to 58 percent.

On the downside, several PSU stocks have delivered negative returns over the past year. Major laggards include Andrew Yule & Co, Punjab & Sind Bank, HMT, MTNL, IREDA, UCO Bank, Rail Vikas Nigam, IRCON International, Central Bank of India, IRCTC, SJVN and MSTC, among others.

Investors are awaiting the Union Budget for defence-related announcements, though analysts said it remains difficult to assess whether the Budget will bring any meaningful changes for the broader PSU basket. Experts noted that divestment targets announced in recent budgets have consistently fallen short, making large-scale value unlocking through divestment unlikely in the near term.

According to Deepak Jasani, independent analyst, performance across other PSU sectors would depend on the emergence of strong tailwinds such as higher revenue visibility or improved realisation levels, particularly in commodity-linked businesses. Without such support, the PSU space as a whole may struggle to deliver broad-based gains.

He added that meaningful improvement would require policy measures providing greater operational and decision-making autonomy to public sector companies, along with a shift away from what he described as a “playing safe” approach. However, he said such changes appear difficult at this stage.