Not surprisingly, the Nifty Private Bank Index has beaten the Nifty 50 and Nifty Bank comfortably over a 3-year period.PSU banks, however, have not only underperformed the broader banking index, they have actually lost money. The Nifty PSU Bank Index has made an absolute loss of 14% over the past three years, even as the Nifty Private Bank Index made an absolute gain of 43%. Without the 30% jump in the Nifty PSU Bank Index on 25 October 2017, triggered by the government's announcement of infusing capital in PSU banks, the loss would have been even greater. Due to PSU banks' NPA issues, the market continues to prefer private sector banks despite the rally in private sector banks' stocks. Among PSU banks, Bank of Baroda and Vijaya Bank are fine," says Purohit.

Source: Economic Times February 05, 2018 00:56 UTC