PSU Banks & NBFC Stocks 2025: Top Picks for Investors

Public sector banks (PSU banks) and non-banking financial companies (NBFCs) are drawing strong investor interest, with many stocks in these sectors showing steady upward momentum. Analysts believe this positive sentiment could continue in the coming quarters, particularly if monetary policy remains supportive.

RBI Rate Decisions Could Boost Financial Stocks

The Reserve Bank of India (RBI) is expected to meet soon, and any surprise rate cut could further stimulate demand for banks and NBFCs. A 25-basis-point reduction, for instance, could act as a major booster for the market.

PSU Banks Remain Attractive

Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, says PSU banks are particularly appealing in the current market environment.

“Valuation-wise, PSU banks look attractive. They have delivered consistent growth of 12–13% over the last four to five quarters. Stocks like Bank of India and Bank of Baroda could be good picks for investors. One can accumulate these stocks on dips and ride the trend for the next couple of quarters,” Kant noted.

NBFCs and Housing Finance Companies in Focus

Analysts also recommend focusing on NBFCs, especially housing finance companies, given lower interest rates and rising disposable incomes. Affordable housing demand is expected to remain robust, making these companies an attractive investment segment.

Kant suggests a basket approach, including PNB Housing Finance, LIC Housing Finance, and Aadhar Housing Finance, rather than investing in individual real estate stocks.

Metals Sector Shows Mixed Trends

While financial stocks remain in focus, metals are seeing varied performance. Globally, copper has risen 15–16% year-to-date, while aluminium, zinc, tin, and steel have declined. Domestically, measures to curb cheap imports have supported local steel prices, making companies like Hindalco and JSW Steel worth monitoring.

Investment Outlook

For retail investors, PSU banks and housing finance NBFCs offer stable growth prospects, while metals may deliver short-term gains but carry higher volatility. A diversified approach—combining strong PSU banks with housing finance NBFCs—can help balance risk and reward.