(Bloomberg) -- A gauge representing the state-owned banks in India rallied to a new all-time high, surpassing a previous peak set 13 years ago, as investors continue to favor government-backed lenders amid rising demand for loans and a sharp recovery in asset quality.
The Nifty PSU Bank Index advanced 2.4% Tuesday to close at the highest level since it began in 2004, taking this year's gains to about 25%. The 12-member index that includes State Bank of India, the country's biggest by assets, is set to outperform a comparable gauge of private banks for a third straight year.Â
The rally in state banks picked up steam after JPMorgan Chase & Co. announced adding Indian government bonds to its benchmark emerging-market index, a move that will potentially push down yields and result in treasury gains for these lenders.
Central Bank of India and Bank of Maharashtra are among top gainers this year, rising more than 60% each, while State Bank of India is the sole decliner.
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