State-owned banks beat their private-sector peers, posting the highest gains in their market capitalisation in Q4 FY24, on the back of improved financial metrics. The government’s focus on long-term projects also largely benefits state-owned lenders, S&P Market Intelligence said in a note.

15 of the 20 largest banks in India logged gains in market capitalisation, with 13 of them posting double-digit increases. Market capitalisation of all PSU banks, on the list of the country’s 20 largest banks, improved from the previous quarter.

“India expects its $3.5-trillion economy to grow 7.6 per cent in FY24 compared with 7.0 per cent in FY23, making it the fastest-growing major economy. The government is spending billions of dollars upgrading the country’s infrastructure, building highways and airports. The government’s focus on such long-term projects likely benefit state-owned banks more than private lenders as they traditionally have higher exposure to these sectors,” the note said.


Indian Overseas Bank led the country’s 20 largest banks, logging a 38.5 per cent sequential increase in market capitalisation to ₹1.13-lakh crore as of March 2024. Punjab & Sind Bank and Bank of Maharashtra ranked second and third, with gains of 38.4 per cent and 38.1 per cent, respectively. 

On the other hand, only ICICI Bank and Yes Bank saw an improvement among private banks, posting single digit growth in market capitalisation. All five banks that witnessed a decline in their market capitalisation were private sector banks — HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank and IDFC First Bank, per S&P data.

Investor sentiment toward Indian banks, especially PSU banks, has notably strengthened in recent years due to robust credit growth in a fast-growing economy. The Nifty PSU Bank Index surged by more than 22 per cent in Q1, while the Nifty Private Bank Index declined by over 5 per cent in the same period.

The private bank index was dragged down by HDFC Bank, which comprises about 26 per cent of the index. Market capitalisation of HDFC Bank declined 15.2 per cent on quarter to nearly ₹11-lakh crore. Even so, HDFC Bank retained its position as the top bank. ICICI Bank and State Bank of India, too, held their second and third ranks, respectively.