Bank PSU bulls: SBI, PNB, IOB among six stocks to hit fresh 52-week high. What to expect next? | Popgen Tech


PSU Bank stocks have risen significantly in recent days, emerging as one of the biggest bulls in the Indian market. On Thursday, due to volatile market sentiment, investors cashed in their gains in public sector banks. The majority of the selloff was seen in the second half of the day. However, six PSU bank stocks hit fresh 52-week highs today before correcting. Among these six stocks were the largest public banker State Bank of India (SBI), Punjab National Bank, Indian Overseas Bank, and UCO Bank.

At around 1.28 pm, Nifty PSU Bank traded at 4,512.60 lower by almost per cent. However, in early deals, the benchmark touched a new 52-week high of 4,617.40.

Indian Overseas Bank was the top gainer rising over 9% currently to trade 35.40 per piece. However, IOB also touched a new 1-year high of 36.45 a piece today. Next would be UCO Bank trading in 35.90 each up 7.97% after hitting a new one-year high of 36.55 per piece. Bank of Maharashtra also hit a fresh 52-week high 36.25 each before trading at 35.10 each at 2.93%.

These three stocks are the top bulls currently under Nifty PSU Banks.

Additionally, PNB stock traded at 60.35 each by 1.86% after touching a new 52-week high of 60 per piece. Major public sector lender SBI hit fresh 52-week high 629.55 per piece before trading on fixed note.

The other stock to touch a new 52-week high would be Bank of India at 103.50 per piece. However, the stock saw a selloff in the second half and is currently trading at 95.20 each down 4.4%.

In a research note dated December 14, Dalal & Broacha analyst Anusha Raheja said, the banking sector is in one of the best phases right now which is likely to continue during the 3- Next 4 years due to strong credit cycle, high interest rate. margins boosting environment, lowest NPLs currently.

Further, the brokerage note added that, unlike the general perception, over the last 2-3 years, the market share of PSU Banks in the systemic business has not only arrested but rather improved marginally. Incremental NPL formation has decreased considerably and provisions on past NPLs have increased to levels of 70-80%.

Going forward, the note added, PSU Banks that have considerable pan-India presence with strong liability franchises will be able to participate in the current above-average credit cycle on an equal footing. In addition, valuations are not at the highest levels indicating more room for improvement than current levels.

On valuations, Dalal & Broacha analysts expect strong profitability to continue moving forward as well as drive their return ratios, and therefore, a re-rating of the valuation is likely. which continues as well. Big banks that is. SBI (1.2x FY24e ABV standalone), BOB (1x FY24e ABV), and Canara Bank (0.8x FY24e ABV) are best positioned to capture higher credit demand and their deposit growth is also strong equally and valuations reflect more upside than current levels. While in small and mid-cap banks valuations are moving ahead of return ratios; reflecting positives are largely captured and therefore, price performance will henceforth be subdued.

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. We advise investors to check with certified experts before making any investment decision.

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