Nifty PSU Bank hits 52-week high, up over 10% in Sept; BoB, PNB, SBI top picks
The Nifty PSU Bank index hit a fresh 52-week high on Wednesday, September 13, jumping over 4 per cent to 4,948.55 by the end of the session. PSU bank shares have climbed more than 10 per cent so far in September alone, pushing its sectoral index to multi-year highs. The 12-pack index of public sector undertaking (PSU) bank shares is trading with gains led by Punjab National Bank, rallying as high as 9 per cent today.
‘’The Nifty PSU Bank index has broken out to multi-year highs, gaining more than 10 per cent in September alone. The chart pattern suggests that this is just the beginning of a rally, but intermediate corrections cannot be ruled out,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
‘’The 4,600-4,450 range has become a strong support zone for the Nifty PSU Bank index. If the index sustains above this level, it could move up to the 5,800-6,000 range,” added Meena.
On Wednesday, the broader Nifty closed above the 20,000 mark for the first time, rallying 76.80 points or 0.38 per cent to 20,070, its all-time closing high. Of 50 Nifty shares, 31 closed higher and 19 declined.
Top PSU Bank stock picks
Market analysts have picked State Bank of India (SBI), Bank of Baroda (BoB), and Punjab National Bank (PNB) as the top PSU bank stock picks to their portfolios. Shares of BoB gained over 5 per cent on Wednesday and settled 4.43 per cent higher at ₹208.70 apiece on the BSE. Shares of SBI gained over 1 per cent to settled at ₹596.45 apiece on the BSE.
Meena adds that investors can also allocate a small portion of their portfolio to smaller PSU banks, as these stocks are high-beta and have the potential to generate higher returns.
Last month, LKP Securities picked out its top PSU stocks which are likely to give good returns to shareholders in the short-term. BoB and Canara Bank featured among the PSU bank picks by the brokerage.
According to the domestic brokerage house, the PSU stocks have generated positive returns over the past two years and have potential for ‘immense value creation’ in the next 3-6 months.
BoB has been moving with a higher top higher bottom formation on the weekly chart, as per the brokerage. LPK Securities sees an upside of 37 per cent on BoB at a target price of ₹250/ ₹265 in the next 3-6 months.
On the outlook, the brokerage says that the bank has strong growth in both advances and deposits on the back of a healthy liquidity position and attractive valuations. ‘’Granular liability profile coupled with competitive cost of funds should in our view help the bank going forward.
Additionally, Canara Bank has been moving with a higher top higher bottom formation on the weekly chart. The stock has been sustaining above a critical moving average on the weekly timeframe, as per the brokerage. Additionally, the price is trading above the previous consolidation. On the higher end, the stock is likely to move towards 400/430.
On the outlook, the brokerage says that the PSU banking major has been reporting consistent growth since the last 12 quarters with improvement in asset quality and should be able to bring down credit cost to a shade over 1 per cent this fiscal.
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Updated: 13 Sep 2023, 05:51 PM IST
