Top PSU banks Budget 2026 winners. Nifty PSU Bank +44% past year. SBI, PNB, Canara Bank infra play analysis for Feb 1 trading. Valuation edge vs private banks
PSU banks lead Nifty +44% gains since Budget 2025. Infra mandates flow directly to SBI, PNB, Canara Bank. Private banks lag on corporate exposure. Working traders need this edge
Budget 2026 infra push accelerates PSU outperformance. Ahmedabad investors position before Feb 1 Sunday announcement
Why PSU Banks Dominate 2026
Nifty PSU Bank: +44% vs Nifty +8% (Feb 2025-Jan 2026)
Key Drivers:
- FY25 profits ₹1.7 trillion (record)
- Net NPAs 2.8% (lowest decade)
- Loan growth 12% vs private 8%
- RBI repo cuts boost margins
Budget Tailwinds:
- Infra capex ₹11 lakh crore
- MSME guarantee expansion
- Home loan deductions ₹4 lakh
- Dividend mandates from RBI profits
Top 5 PSU Banks: Budget 2026 Winners
| Rank | Bank | 1Y Return | P/B Ratio | Q3 Profit Growth | Infra Edge |
| 1 | Canara Bank | +67% | 1.4x | +28% YoY | Retail/MSME leader |
| 2 | SBI | +32% | 1.8x | Q4 Feb 7 | Scale + infra mandates |
| 3 | PNB | +41% | 1.2x | +22% YoY | Corporate turnaround |
| 4 | Bank of India | +52% | 0.9x | +7.5% YoY | Valuation bargain |
| 5 | Central Bank | +58% | 0.9x | +31% YoY | Retail growth 21% |
Valuation Edge: Mid-cap PSUs 0.8-1.2x P/B vs SBI 1.8x
Budget 2026 PSU Bank Triggers
Trigger 1: Infra Financing Mandates
₹25,000 crore infra risk fund → SBI/PSU allocation 60%
Winners: SBI, PNB (corporate infra desks)
Trigger 2: MSME Credit Guarantees
₹5 lakh crore target → Retail loan mandates
Winners: Canara, Central Bank (RAM segment leaders)
Trigger 3: Dividend Policy Clarity
RBI ₹2.1 lakh crore dividend → PSU banks follow
Immediate: 30-50% payout mandates
Q3 FY26 Performance Edge
Standouts:
Canara Bank: NIM stable despite repo cuts
Central Bank: Net NPA 0.45% (best in class)
Bank of India: Retail loans +20.6%
UCO Bank: Net profit +15.8%
Private Bank Pain: NIM compression hits HDFC/ICICI harder.​
Position Sizing Matrix (Feb 1 Sunday)
| Conviction | Allocation | Instrument | Risk Rule |
| High (Canara/SBI) | 25% | Weekly calls | 0.5% stop |
| Medium (PNB/BOI) | 15% | Stock futures | Trailing stop |
| Low (Others) | 10% | ETFs only | 9:15-10 AM |
Max Exposure: 50% total. Cash 50% minimum
Technical Setup (Budget Eve)
Common Patterns:
- Gap up 5-8% on infra announcements
- 3 day follow through (65% cases)
- IV crush kills options post event
- Mean reversion by Day 5
Risk: Recent 52 week highs (BOI, Central Bank)
Budget Day Trading Rules
9:15-10:00 AM: Capture initial momentum
10:00-11:00 AM: Partial profit booking
Post Budget Speech: No fresh entries
Pro Rule: Infra allocation >₹25,000 Cr = hold 3 days
FAQ
Q1: Which PSU bank gains most from infra budget?
Canara Bank leads execution. SBI wins scale. PNB turnaround story.
Ventura Securities Analysis
​Q2: Are PSU valuations stretched vs private banks?
No. Mid caps 0.9x P/B vs HDFC 3.2x. Earnings growth justifies premium.
Whalesbook Q3 Data
Q3: Budget dividend mandates confirmed?
Likely. RBI ₹2.1T dividend sets precedent. 30-50% payout expected.
5Paisa Budget Preview
Q4: When does SBI Q4 result impact?
Feb 7 post-budget. Beat estimates = fresh leg up.
Economic Times PSU Coverage
Q5: Retail vs corporate loan growth matters?
Yes. Retail/MSME 20%+ growth = margin protection. Canara/Central lead.
Motilal Oswal PSU Report
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