In 2023, the Nifty PSU Bank index exhibited a significant surge of 28%, surpassing the benchmark Nifty 50, which registered a gain of approximately 17% by December 20. The majority of PSU bank stocks experienced notable increases during the calendar year, propelling the Nifty PSU Bank index to outperform the Nifty 50. Stocks like Punjab National Bank and Indian Bank demonstrated impressive gains, each surging over 50% throughout the year. Similarly, Central Bank of India, Bank of Maharashtra, and Union Bank of India witnessed substantial increases, each recording jumps of over 40%. Key contributing factors to the success of PSU bank stocks include robust growth in advances, net interest income (NII), a reduction in gross non-performing assets (GNPA), and strong profitability. Additionally, investors were drawn to these stocks due to their appealingly low valuations. Vijay Gour, Analyst - BFSI at Choice Broking, highlighted that "stock prices of public sector banks (PSBs) were driven by healthy growth in advances, strong growth in net interest income (NII), reduction in gross non-performing assets (GNPA), improvement in the restructured portfolio and robust growth in profitability." Abhishek Jain, Head of Research at Arihant Capital, pointed out that the rally in PSBs can be attributed to several factors, including low valuations and improving asset quality.