PSU Bank index rises 2% from day's low as Punjab & Sind Bank board to mull raising up to Rs 3k cr via QIP

PSU Bank index rises 2% from day's low as Punjab & Sind Bank board to mull raising up to Rs 3k cr via QIP

Nifty PSU Bank index rose 2% from intraday low on December 30 as the index got boost from Punjab & Sind Bank announcing that its board will consider raising up to Rs 3,000 crore through QIP on January 21.

The bank has announced to the stock exchanges about the Notice of Extraordinary General Meeting (EGM) scheduled to be held on January 21, 2026.

"The bank seeks approval of shareholders to create, offer, issue and allot Fresh Equity Shares of face value of Rs 10 (Rupees Ten only) each up to an amount of Rs 3,000 crore (including premium) by way of Qualified Institutional Placement, on such terms and conditions as may be decided by the Board/Committee in its absolute discretion," said the PSU bank.

"In order to meet the growing capital requirement of funds in terms of Basel III Capital Regulations and consequent Capital Charge and for general lending purposes as may be decided by the Board, the Bank proposes to raise funds to improve the Capital Adequacy of the Bank and to fund general business needs of the Bank," the lender said about its fundraising rationale.

At 1:50 pm on December 30, Nifty PSU bank index was trading 1.4% higher at 8,405 with Indian Bank, Bank of Maharashtra leading the gains by rising 2.75% and 2.3%, respectively.

Indian Overseas Bank and Canara Bank were the other gainers by rising 1.7% and 1.6%, respectively.

Earlier this month, a report said, citing a government source, that government will likely dilute its stake in three public sector banks--Central Bank of India, UCO Bank, and Punjab & Sind Bank--soon through the offer-for-sale route.

The move will help these banks meet the Securities and Exchange Board of India's minimum public shareholding norm, reported Informist.

Earlier this month, the government offloaded a 6% stake in Bank of Maharashtra to make it compliant with the SEBI norm. The government had offered to offload a 5% stake in the bank through the offer for sale, with an option to sell an additional 1%. The government also divested a 2% stake in Indian Overseas Bank through an offer for sale, with a green shoe option for an additional 1%.

For the immediate future, the shares of PSU banks are likely to remain volatile, said Siddharth Maurya, Founder & Managing Director at Vibhavangal Anukulakara. Although the asset quality ratios, capital adequacy, and balance sheet strength of the banks have shown improvement, the valuations have started undergoing consolidation, coming after the recent rally, he added.

"The coming times would be stock-specific, with earnings performance and policy cues playing important roles in determining the course," the analyst said.