The sell-off was triggered by Bank of Baroda’s weaker-than-expected March quarter results, which dampened sentiment across the PSU banking space. State Bank of India (SBI) and Bank of Baroda (BoB) witnessed the largest erosion in market capitalisation—losing ₹14,200 crore and ₹13,000 crore, respectively. Overall, the combined market value of the Nifty PSU Bank index declined by ₹58,000 crore.
Following Tuesday’s sharp decline, the Nifty PSU Bank index is now down 5% year-to-date and is on track for its first annual loss in five years. This marks a notable reversal for an index that had been among the top-performing sectoral indices until recently. In contrast, the broader Nifty50 has gained 3.1% during the same period, while the Nifty Bank Index has outperformed with a more than two-fold rise of 7%.
Shares of Bank of Baroda plunged as much as 15% in intra-day trade before paring some of their losses on Tuesday after the state-owned lender reported weaker-than-expected net interest income (NII) for the March 2025 quarter. The NII declined 6.6% year-on-year to ₹11,020 crore, falling short of the ₹11,678 crore estimated by a CNBC-TV18 poll.
Despite the miss on NII, the bank posted a 3.3% rise in net profit, which stood at ₹5,048 crore in Q4FY25. However, asset quality pressures persisted, with slippages rising to ₹3,159 crore during the quarter—up from ₹2,915 crore in the December 2024 quarter.
Shares of State Bank of India (SBI) also faced selling pressure on Tuesday, slipping 2.3% after the lender reported its Q4 earnings over the weekend. The decline followed downward revisions in earnings estimates by some analysts, who flagged concerns over pressure on the bank’s net interest margin (NIM) due to a lower interest rate environment. SBI’s NIM contracted to 3.15% in the March quarter, down from 3.47% a year earlier.
Citi, which revised its earnings estimates for SBI for the next two financial years, noted that the bank’s lower net interest margin is partly offset by higher non-interest income.
“We revise earnings lower by 1–2% for FY26–27,” the global brokerage wrote in an investor note.
Despite the cut, Citi maintained its “Buy” rating on the stock and raised its 12-month price target to ₹920 from ₹905, citing a higher FY25 book value and increased valuation of the bank’s subsidiaries.
