Indian Overseas Bank, Punjab & Sind Bank, other PSU bank stocks rally up to 4% on report of accelerated govt stake sale

Shares of public sector banks (PSBs) rallied up to 4% on Tuesday following reports that the government is set to fast-track the process of offloading its stake in select lenders.

Indian Overseas Bank share price surged as much as 4% to ₹38.99 apiece, while Central Bank of India shares rose 2.68% to ₹39.00. UCO Bank stock price gained 2.7% to ₹32.14, and Bank of Maharashtra shares advanced 2.8% to ₹56.15. Meanwhile, Punjab & Sind Bank share price added 3.4% to trade at ₹32.30 on the BSE.

According to a report by CNBC Awaaz, the government plans to accelerate the disinvestment process in public sector banks, with the appointment of merchant bankers in the final stages. The Centre aims to sell up to a 20% stake in five PSU banks over the next six months through Qualified Institutional Placement (QIP) and Offer for Sale (OFS) routes.

The proposed stake sale will involve UCO Bank, Bank of Maharashtra, Indian Overseas Bank, Central Bank of India, and Punjab & Sind Bank. Proceeds from the stake sale are expected to be utilised to meet the respective banks’ capital and operational requirements, the report added.

The government stake sale in these PSU banks is aimed at meeting the Securities and Exchange Board of India’s (SEBI) 25% minimum public shareholding norm by August 2026.

PSU Bank Index Rallies

The rally in PSU Bank stocks supported gains in the Nifty PSU Bank index. The index opened marginally higher at 6,969.60 compared to its previous close of 6,952.90 and rose to an intraday high of 7,026.35, marking a gain of 1.05%.

Barring Canara Bank and Union Bank shares, all other constituents of the Nifty PSU Bank index were trading in the green, reflecting broad-based investor interest in the sector following the disinvestment news.

In contrast, the broader markets traded weak. The benchmark Sensex and Nifty 50 indices were down 0.3% each, indicating a cautious mood across the market even as PSU bank stocks outperformed.

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