New Delhi, Aug. 21 -- While banking stocks staged a comeback in August after a July slump, it was public sector banks (PSBs) that managed to attract significant investor interest, not only outperforming their private peers but also beating the benchmark indices.

The Nifty PSU Bank index, which tracks 12 PSBs, has gained 3.30% so far this month, outperforming the Nifty Private Bank index, which declined 0.40%. This performance also surpassed the Nifty 50's 1.27% gain in August. Individually, Indian Bank shares rose 8%, while those of Bank of India and SBI, each gaining 4% in August so far.

The outperformance can be attributed to the healthy figures posted by PSBs in the June quarter, driven by expanding credit growth, mainly from higher ...