A very interesting and completely opposite trend is being seen in the Indian stock market these days. On one hand, foreign investors are continuously withdrawing their money and creating huge selling pressure in the market, while on the other hand, they are secretly investing heavily in the shares of public sector banks. It is very important for common investors to understand that when big foreign investors are staying away from the entire market, then what is there in these selected public sector banks that is attracting them increasingly.
Big bet on government banks amidst withdrawals
If we look at the figures of sales by foreign investors, the situation appears quite surprising. In the year 2025, these investors had made a record withdrawal of $19 billion from the Indian market. At the same time, by the beginning of 2026, shares worth about $ 2 billion have been sold so far. Despite such a large and sustained sell-off environment, for the past several quarters foreign portfolio investors have continued to find it safe and profitable to park their large sums of money in public sector banks.
Bank of Maharashtra did wonders
In this entire group of government banks, the most shocking figure has come out of Bank of Maharashtra. Foreign investors are so favorable to the performance of this bank that within just two years their stake has jumped from 0.5 percent to 5 percent. Foreign investors have been investing money in it for eight consecutive quarters. On the basis of this unprecedented foreign confidence, on February 19, the shares of this bank also touched its new fifty-two week high of Rs 69.85.
Old record of foreign investment broken in these also
This trust of foreign investors is not limited to just one bank, rather they have strongly strengthened their hold in Union Bank of India and Canara Bank also. Foreign investment in Union Bank has reached the highest level of 8.14 percent in the last decade. Similarly, foreign stake in Canara Bank has also increased to 14.6 percent, which is the highest level since September 2012. Shares of Bank of India and Indian Bank have also reached their highest level of fifty-two weeks riding on this wave of foreign buying.
From SBI to PNB, there is greenery everywhere
Foreign stake in the country’s largest government bank SBI has also increased continuously to 10.3 percent, which is considered to be the highest level in the last five quarters. Apart from this, foreign investors have also invested heavily in the shares of Bank of Baroda, Indian Overseas Bank and Punjab National Bank. In the last one year, Nifty PSU Bank Index has made a spectacular jump of about 60 percent. In comparison, Nifty Bank has risen only 23 percent and Nifty 50 has risen only 11 percent.
Valuation of public sector banks is attractive
Despite such a big rally, the valuation of public sector banks still seems quite attractive and cheap to foreign investors. In fact, the Nifty PSU Bank index is currently trading at 1.3 times its one-year-ahead book value. On the contrary, Nifty Bank index is trading at almost 2 times. This comparatively cheap valuation and expectation of better growth is motivating them to continuously increase stake in public sector banks despite heavy selling in the overall market.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.