Private vs PSU Banks: What should you pick in the current market scenario?

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Central Bank of India, and Bank of Maharashtra, up over 36 percent each. Meanwhile, Punjab National Bank, Indian Overseas Bank, Union Bank of India, UCO Bank and Punjab & Sind Bank have also advanced between 15 and 25 percent. On the other hand, in the Nifty Private Bank index, of its 10 constituents, 6 are in the green whereas 4 have given negative returns.

IDFC First Bank has soared the most, over 48 percent, followed by RBL Bank, up over 30 percent and IndusInd Bank, up over 17 percent. ICICI Bank, Axis Bank and Federal Bank have also added 3.8 percent, 3.3 percent and 2.8 percent, respectively, in 2023 YTD. However, City Union Bank has shed the most, down over 26 percent, followed by HDFC Bank (-7.5 percent), Bandhan Bank (-6.5 percent) and Kotak Bank (-4.3 percent).

The PSU banks had a solid run in the past six months on the back of a positive business environment for the power and infra segment where PSU banks have a bigger exposure. Going forward, as of now, the NIM of banks has peaked out and the credit costs bottomed, the factor that would now drive the stock price would be stable credit growth and controlled GNPA numbers, said Trivedi. “Taking into consideration these factors, we continue to back the top private banks and believe upcoming turbulence, if any, would be least impacted.

HDFC Bank and ICICI Bank are my top picks in the space and Federal Bank in the mid-bank category." Private banks are well placed in terms of retail growth. There is strong demand witnessed in unsecured pockets and lower yield housing credit. Public banks are also not behind, the growth in the industry segment is gradually picking up.