PSU stocks lift BSE mcap share to 14.97% in 2026

PSU market share hits a 17-month high

Public sector undertaking (PSU) stocks increased their share of the total market capitalisation of all BSE-listed companies to a 17-month high in January 2026. The share rose to 14.97% in January 2026, the highest level since August 2024. The move came even as performance across the PSU universe stayed uneven, with strength concentrated in a smaller set of counters. For market participants, the market-share metric is a quick way to track whether state-owned companies are gaining weight in headline indices and investor portfolios. It also reflects where incremental buying has been focused.

Month-on-month rise, but still below the July 2024 peak

The January 2026 market-share figure marked an increase from 13.93% recorded a month earlier. While the move signals improving relative performance, it remains below the peak share of 16.76% reached in July 2024. This gap highlights that the PSU trade has not fully regained the breadth or intensity seen during the earlier high point. It also underlines how selective leadership can lift aggregate market-share numbers without a broad-based rally.

Market capitalisation of listed PSUs climbs from February 2025 low

The combined market capitalisation of 96 listed PSU companies stood at Rs 68.61 lakh crore in January 2026. That represented a rise of nearly Rs 16 lakh crore from the February 2025 low of Rs 52.63 lakh crore. Recent months also showed elevated levels, with PSU market cap at Rs 66.31 lakh crore in December 2025 and Rs 66.04 lakh crore in November 2025. In other words, the market cap gains in January came on top of an already higher base, suggesting sustained interest in select PSU themes.

Rally driven by select banking, defence, metal and commodity names

The rise in PSU market share was attributed to gains in select stocks across banking, defence, metals and commodities. At the same time, several other PSU counters continued to trade weak over the past year, limiting participation. This split matters because it affects how durable the sector’s outperformance can be if leadership remains narrow. It also means stock selection has been a larger driver of returns than a broad sector rerating.

Why defence PSUs have been bid up

The PSU defence segment traded higher on expectations of increased government spending amid ongoing geopolitical tensions. The theme has been supported by the market’s focus on domestic manufacturing and order visibility, although the rally in the provided data is described in terms of expectations rather than specific contract announcements. This backdrop has coincided with strong gains in some defence-related PSUs, reflecting investor preference for names perceived to be aligned with public spending priorities.

PSU banks: valuation gap and operating performance in focus

PSU banks also saw strong performance due to the valuation gap with private sector banks, along with improved operational performance relative to private peers. The narrative in January 2026 reflects that banking leadership within PSUs has contributed meaningfully to the sector’s aggregate lift. Several state-run lenders were listed among the major gainers over the past year, indicating that the market’s preference extended beyond one or two large names.

Commodity cycle tailwinds lift metals and miners

The commodity segment gained momentum as the global commodity cycle turned favourable, supporting improved realisations across the sector. This has been relevant for metals and mining PSUs where earnings sensitivity to price moves is high. A key example in the data is Hindustan Copper, which benefited from rising global copper prices and additional company-specific triggers mentioned separately in the article pack.

Top gainers and laggards across the PSU space

Hindustan Copper emerged as the top performer, rising more than 210% during the period referenced for one-year performance. Tourism Finance Corporation and National Aluminium Company (NALCO) followed, gaining over 120% and 108%, respectively. Other major gainers included Canara Bank, Indian Bank and Union Bank of India, each advancing more than 50%. Chennai Petroleum Corporation, Garden Reach Shipbuilders and Bharat Electronics posted gains in the range of 53% to 58%.

On the downside, several PSU stocks delivered negative returns over the past year. The laggards cited included Andrew Yule & Co, Punjab & Sind Bank, HMT, MTNL, IREDA, UCO Bank, Rail Vikas Nigam (RVNL), IRCON International, Central Bank of India, IRCTC, SJVN and MSTC, among others.

Key data at a glance

Stock-specific action: SAIL moves ahead of Q2 FY26 results

Separately, Steel Authority of India Limited (SAIL) saw sharp price action ahead of its Q2 FY26 financial earnings, which were expected to be announced shortly. The stock surged nearly 8.2% to a new 52-week high of Rs 143.2. At 02:19 p.m., SAIL traded at Rs 140.55 on BSE, up around 6% versus the previous close of Rs 132.3, with a market cap of Rs 58,048 crore.

The Maharatna PSU reported an 808% YoY rise in Q1 FY26 net profit and announced major capex plans, including a Rs 36,000 crore IISCO expansion project. Over the last year, the stock delivered positive returns of over 21%, and it gained around 7% in the last one month, as stated.

Hindustan Copper and ITI show how selective leadership can look

Hindustan Copper was also highlighted for a sharp, shorter-term move, with the stock rising around 50% in the past month in one excerpt. The move was linked to rising global copper prices, a 20-year Rakha mine lease extension, and expansion plans to triple ore production by 2030-31. Another excerpt cited the disruption at Indonesia’s Grasberg mine leading to a force majeure that restricted global copper supplies, while analysts pointed to the potential for the largest annual copper deficit in over two decades. In a separate development, the company announced a Rs 2,000 crore capex plan over the next five to six years. A SEBI-registered analyst, Mayank Singh Chandel, flagged resistance in the Rs 281 to Rs 286 zone and cited a stop loss level at Rs 225.10.

Meanwhile, ITI was cited as continuing its upward movement, with its share price rallying 19% to hit a new high of Rs 422.45 on BSE in Monday’s intra-day trade amid heavy volumes, while the broader market was weak. In two days, ITI surged 43%, and at 12:20 PM, the BSE Sensex was down 1.2% at 78,264. The note also said ITI’s market capitalisation crossed Rs 50,000 crore for the first time, and cited a market cap of Rs 51,609 crore with the stock trading 17% higher at Rs 535.15. It added that 64.3 million equity shares, nearly 67% of the total floating equity, changed hands on the NSE and BSE.

Broader context: PSU performance since 2021

The longer-term backdrop in the provided material pointed to a strong turnaround in PSU performance since 2021, after several years of underperformance. One data point cited was that the Nifty PSE index delivered a CAGR return of ~50% since 2021. A separate excerpt also stated that over the past three years, Nifty returned 142%, while the Nifty PSE and Nifty PSU Bank indexes rose 326% and 493%, respectively. A table snippet in the material also showed sharp post-2021 CAGRs for select PSUs, including Mazagon Dock Shipbuilders (2021-YTD 155.4%) and RVNL (2021-YTD 136.1%), alongside their longer-period comparisons.

What investors are watching next

January 2026 data shows PSU market share rising meaningfully, but leadership remains concentrated in specific pockets such as banks, defence, and commodity-linked names. For investors, the next set of cues will come from company earnings and project updates, including results timelines like SAIL’s Q2 FY26 announcement. Market participants will also track whether laggards stabilise or whether the market-share gains continue to be driven by a smaller group of outperformers.