Bank of Baroda shares remained under pressure on Friday, falling nearly 4 percent in morning trade, as investors continued to react to the lender's $600 million (around Rs 5,700 crore) settlement in the long-running NMC Health litigation. The stock traded around Rs 250, down 3.9 percent, making it one of the top losers on the Nifty 500. The stock has declined 16.7 percent so far this year, compared with a 7 percent fall in the Nifty 50.

The weakness in Bank of Baroda also dragged the broader PSU banking pack lower, with the Nifty PSU Bank index emerging as the worst-performing sectoral index despite gains in the broader market.

At around 9:59 am, the Sensex was up 485.01 points, or 0.63 percent, at 77,987.13, while the Nifty gained 163.65 points, or 0.68 percent, to 24,339.35. Market breadth remained positive, with 2,016 shares advancing, 1,256 declining, and 172 unchanged. However, the Nifty PSU Bank index fell 1.7 percent, while the Nifty Bank index was little changed and the Nifty Private Bank index rose about 0.6 percent.

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Selling was broad-based across state-run lenders. Union Bank of India dropped over 4 percent, while Punjab National Bank declined about 2 percent. Indian Bank, Canara Bank, Maharashtra Bank, Bank of India, State Bank of India, Indian Overseas Bank and Punjab & Sind Bank also traded in the red. UCO Bank and Central Bank of India were among the few PSU lenders to buck the trend with modest gains.

The pressure on Bank of Baroda follows the lender's announcement that it has agreed to an out-of-court settlement with the joint administrators of NMC Health PLC, NMC Healthcare Ltd and NMC Holding Ltd. The bank will pay $600 million to resolve the litigation without any admission of liability or wrongdoing, bringing the long-running legal dispute to an end.

Brokerage Nomura retained its 'Neutral' rating on the stock with a target price of Rs 300, noting that the settlement amount is equivalent to around 4 percent of the bank's net worth. While the brokerage said the agreement removes the uncertainty of prolonged litigation, it expects the settlement to weigh on the bank's Q1FY27 earnings, as the provision is unlikely to have been made earlier.

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