Sanjay Kumar In my opinion, obviously PSNR is somehow proportional to the Entropy. But, I think if the PSNR increases (which means the image has lesser noise components) then Entropy should decrease. As noises only add randomness and undecidability to the original signal which in turn increases the Entropy. Therefore, I beg to differ with the statement "PSNR of image increase an the entropy of image increase (in watermarking)".
Please feel free to correct me if I don't get your question.