Budget 2026: PSU bank stocks plunge up to 6%; Bank of India, BoB lead losses

Shares of state-run banks fell sharply on Sunday, with all 12 stocks in the Nifty PSU Bank index trading lower. Losses were led by Bank of India, which slid 6% to a day’s low of 154.56 rupees on the NSE. Bank of Baroda, Indian Bank, and Union Bank followed, declining 5%, 4%, and 3%, respectively.

The decline came after the government announced the formation of a high-level committee to review the sector and align it with the next phase of growth. The move is part of the government’s Viksit Bharat initiative and was announced by Finance Minister Nirmala Sitharaman during her Union Budget 2026 speech.

The Nifty PSU Bank index was down 3.3% around noon, making it the worst-performing sector at the time. Punjab National Bank, State Bank of India, Indian Overseas Bank, Bank of Maharashtra, Punjab & Sind Bank, Canara Bank, Central Bank of India, and UCO Bank fell between 3.5% and 1.5%.


The Nifty Bank index also slipped into the red, down 0.22% around noon, with eight stocks trading lower.

The government also announced plans to restructure state-run nonbank lenders Power Finance Corp. and REC as part of efforts to strengthen public sector financial institutions.

This is the second time in India’s history that stock markets are open for trading on a Budget Sunday—the previous instance being February 28, 1999, during the Atal Bihari Vajpayee-led government.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)